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Investors sue Israeli unicorn Lusha for 35% stake

An unprecedented lawsuit has been filed within the financial division of the Tel Aviv District Court towards Israeli unicorn Lusha, which six months in the past, raised $205 million at a valuation of $1.5 billion. The lawsuit, filed by Plus Ventures enterprise capital fund and Oren Abekasis, are suing Lusha and entrepreneurs Assaf Eisenstein, his spouse Anat Eisenstein, and Yoni Tserruya. In the go well with, Plus Ventures and Abekasis are demanding rights to a 35% of the corporate’s shares.

The go well with was filed by Advs. Zohar Lande, Eyal Nachshon, Dana Bookstein, and Naama Ben Aroush Moshe of Barnea Jaffa Lande & Co. legislation agency. According to the go well with, the Eisensteins and Tserruya fraudulently and behind the backs of the plaintiffs, undertook a course of supposed to dispossess the fruits of the plaintiffs’ funding and shares, present them with false shows, and to steal from them the promising and profitable enterprise and product wherein they invested together with their rights and to develop the enterprise and product, to commerce them and profit from the income.

The go well with states that the plaintiffs invested thousands and thousands of shekels within the Neta Eisenstein firm and cumulatively held 35% of its shares and rights. The plaintiffs did such out of religion within the firm’s merchandise, in its imaginative and prescient, and in its lead entrepreneur, Assaf Eisenstein. During this era, the corporate targeted, amongst different issues, on growth of the product referred to as Network Monkey, an internet browser add-on, which by monitoring and information from web platforms, assists customers in figuring out goal populations related to their wants.

In observe, in its newest type, from March 2016, the product has been primarily designed to function an web browser add-on, which allows customers, visiting the LinkedIn web site, to establish related targets and obtain their private particulars. The lawsuit states that within the 4 years previous to the start of 2016, the plaintiffs supported the corporate on the whole and Assaf Eisenstein particularly, and labored with him with the intention to fulfill, develop, apply, and promote the corporate’s imaginative and prescient and dynamic targets, in addition to the modern and promising enterprise and product that it promoted.

Over the years, the plaintiffs invested their cash within the enterprise, based on the calls for of Assaf Eisenstein who was the entrepreneur, director, CEO and spirit behind the corporate, whereas they relied on his shows and put their full belief in him. In addition to their cash, the plaintiffs invested their time and expertise within the firm and suggested Assaf Eisenstein.

“Only in hindsight did it develop into clear to the plaintiffs, to their astonishment, that they continued to speculate their cash and commit sources to the corporate in response to Assaf Eisenstein’s requests, whereas he labored in the dead of night and behind their backs, alongside together with his spouse, with the intention to dispossess, oust and exclude the plaintiffs, and steal the enterprise and product in full from the plaintiffs, and the remainder of the corporate’s buyers

“The plaintiffs also discovered that at some point, Assaf connected with Yoni Tserruya with the goal of ousting and stealing the entire venture and product from the plaintiffs and other company investors. It is also claimed that it became clear to the plaintiffs subsequently that in the beginning of 2016, at the same time that Assaf engaged in false representation to the plaintiffs, claiming the project had been completed and had come as far as it could, Assaf connected to Yoni Tzeruya, and together, they set out on a joint venture, with the project and its product at its center.” The two secretly established a brand new firm, whereas hiding their id as shareholders, they usually transferred the product to this new company framework.

It can also be claimed that, “Assaf and Yoni used the venture’s original business plan; they stole the company’s business secrets as well as its technology, including the original code of its flagship product; the two used the company’s key individuals, who secretly moved to jobs at the ‘new venture;’ and the two worked towards the same targets, ideas, users, clients, strategic plans, and development possibilities created at the company; they even made use of the plaintiffs’ money, which was provided at the beginning to fund the company’s projects and products.”

The lawsuit claims that the code was created for an similar goal and relies upon an similar code, which underwent blurring and camouflaging. The plaintiffs declare that they didn’t know of this exercise. The go well with provides that Assaf started, as one other line of false illustration and improper actions, collectively together with his spouse, who even served as a director of the corporate, to try to push for dismantling and liquidation of the Neta Eisenstein firm, whereas hiding important info from the plaintiffs.

The go well with claims that on March 18, 2016, the Eisenstein firm introduced the ultimate model of the product, Network Monkey, which was added to the Google Chrome app retailer. It was subsequently found that on that actual day, an similar model of the app, referred to as Lusha, was additionally added to the app retailer. That product, because the plaintiffs have discovered just lately, was duplicated by Assaf Eisenstein and the event and advertising and marketing groups on the Neta Eisenstein firm. This was achieved by a secret and separate company framework, and information of its existence was by no means shared with the plaintiffs and was stored from them.

According to claims made by the enterprise capital fund, because of an investigation, they found that from the start of 2016, Assaf Eisenstein started to “play a double game”, wherein on the one hand, he functioned in his many roles on the Neta Eisenstein firm and introduced to the plaintiffs false shows, claiming that the corporate was reaching the tip of its operations and was to be liquidated; whereas then again, Assaf Eisenstein was working within the shadows together with his spouse to switch the challenge into the brand new company framework, which he established with Yoni Tzeruya. According to the lawsuit, Eisenstein and Tzeruya have been conscious of the seriousness of their actions and subsequently blurred their identities as house owners of the duplicated app, working for an prolonged interval “under the radar.” Thus, as a part of the conspiracy that Eisenstein and Tzeruya put collectively, on May 22, 2016, Assaf Eisenstein established the Lusha Systems Ltd.

Through a further camouflage course of, the corporate’s shares weren’t held instantly and within the title of the 2 “entrepreneurs.” Rather, they have been held in belief, by Y.D.H. Trusts, Ltd. Subsequently, it turned identified to the plaintiffs that the corporate’s shares have been held and equally divided (50-50) by Assaf Eisenstein and Yoni Tzeruya. The firm then merged with one other firm with the title DEV YT LTD., which was owned by Tzeruya.

The lawsuit can also be based mostly on an skilled opinion, which determines that the essence of the performance, the consumer interface, and the consumer aspect code of every of the 2 apps are just like utterly similar and that “there is no chance of obtaining this level of similarity, if the new app was developed from scratch… there is no doubt that this is a hurried copy/paste of the original software project.” As if this isn’t sufficient, the skilled, Guy Ronen, claims that in features the place the 2 apps current minor variations in software program, that is an effort to “camouflage,” the duplication efforts, by the addition of the Lusha branding inside the opening/closing of the app, has no logical justification.

The lawsuit, as said, signifies that the enterprise capital fund found that it had been a sufferer of fraud solely because of articles in “Globes”, which featured Lusha and interviewed its CEO Assaf Eisenstein, in December 2021. The plaintiffs discovered an article in “Globes” entitled, “We received many emails from funds, and we said no thanks: the startup that doesn’t want investors.” The plaintiffs have been amazed to find that the article contains an interview with Assaf Eisenstein, who explains his doctrine with regard to relationships between entrepreneurs and buyers. He is introduced within the article because the individual heading Lusha, and as ‘someone who had managed without external funding until six months previously.’

No remark has but been obtained from Lusha.

Published by Globes, Israel enterprise information – – on May 8, 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.

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