Investors sue Israeli unicorn Lusha for 35% stake
6 min readAn unprecedented lawsuit has been submitted in the financial section of the Tel Aviv District Court docket towards Israeli unicorn Lusha, which six months in the past, lifted $205 million at a valuation of $1.5 billion. The lawsuit, filed by Additionally Ventures undertaking funds fund and Oren Abekasis, are suing Lusha and business owners Assaf Eisenstein, his wife Anat Eisenstein, and Yoni Tserruya. In the suit, Additionally Ventures and Abekasis are demanding rights to a 35% of the company’s shares.

The suit was submitted by means of Advs. Zohar Lande, Eyal Nachshon, Dana Bookstein, and Naama Ben Aroush Moshe of Barnea Jaffa Lande & Co. regulation business. In accordance to the suit, the Eisensteins and Tserruya fraudulently and behind the backs of the plaintiffs, undertook a approach meant to dispossess the fruits of the plaintiffs’ expenditure and shares, deliver them with false displays, and to steal from them the promising and lucrative enterprise and merchandise in which they invested including their rights and to build the undertaking and product, to trade them and profit from the earnings.

The fit states that the plaintiffs invested millions of shekels in the Neta Eisenstein firm and cumulatively held 35% of its shares and rights. The plaintiffs did these kinds of out of faith in the company’s merchandise, in its vision, and in its direct entrepreneur, Assaf Eisenstein. All through this period of time, the organization targeted, between other things, on improvement of the product named Network Monkey, a world wide web browser insert-on, which by checking and information from web platforms, assists buyers in figuring out focus on populations suitable to their needs.

In apply, in its latest kind, from March 2016, the item has been primarily made to provide as an net browser add-on, which permits consumers, checking out the LinkedIn web-site, to establish related targets and acquire their personal specifics. The lawsuit states that in the four many years prior to the beginning of 2016, the plaintiffs supported the corporation in typical and Assaf Eisenstein in specific, and labored with him in order to satisfy, develop, implement, and promote the company’s vision and dynamic targets, as properly as the progressive and promising undertaking and products that it promoted.

More than the many years, the plaintiffs invested their cash in the enterprise, in accordance to the needs of Assaf Eisenstein who was the entrepreneur, director, CEO and spirit driving the corporation, even though they relied on his displays and place their total rely on in him. In addition to their dollars, the plaintiffs invested their time and expertise in the enterprise and encouraged Assaf Eisenstein.




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“Only in hindsight did it turn out to be apparent to the plaintiffs, to their astonishment, that they ongoing to commit their income and dedicate resources to the firm in response to Assaf Eisenstein’s requests, although he worked in the darkish and behind their backs, along with his wife, in order to dispossess, oust and exclude the plaintiffs, and steal the undertaking and product or service in complete from the plaintiffs, and the rest of the company’s traders

“The plaintiffs also discovered that at some place, Assaf linked with Yoni Tserruya with the objective of ousting and thieving the entire enterprise and merchandise from the plaintiffs and other corporation traders. It is also claimed that it became obvious to the plaintiffs subsequently that in the starting of 2016, at the exact time that Assaf engaged in untrue illustration to the plaintiffs, professing the undertaking had been done and had occur as considerably as it could, Assaf linked to Yoni Tzeruya, and alongside one another, they set out on a joint enterprise, with the job and its products at its center.” The two secretly set up a new company, when hiding their identification as shareholders, and they transferred the merchandise to this new corporate framework.

It is also claimed that, “Assaf and Yoni utilized the venture’s primary small business plan they stole the company’s company tricks as effectively as its technologies, including the authentic code of its flagship solution the two used the company’s essential people, who secretly moved to work opportunities at the ‘new venture’ and the two worked in the direction of the identical targets, concepts, consumers, clients, strategic ideas, and improvement options established at the business they even manufactured use of the plaintiffs’ money, which was provided at the commencing to fund the company’s tasks and solutions.”

The lawsuit statements that the code was designed for an similar function and is primarily based on an identical code, which underwent blurring and camouflaging. The plaintiffs claim that they did not know of this activity. The match adds that Assaf commenced, as one more line of false representation and incorrect activities, with each other with his wife, who even served as a director of the business, to test and drive for dismantling and liquidation of the Neta Eisenstein business, whilst hiding significant facts from the plaintiffs.

The suit promises that on March 18, 2016, the Eisenstein enterprise presented the closing version of the products, Community Monkey, which was included to the Google Chrome app store. It was subsequently learned that on that precise day, an similar edition of the application, referred to as Lusha, was also added to the app retail outlet. That product or service, as the plaintiffs have acquired not long ago, was duplicated by Assaf Eisenstein and the enhancement and marketing teams at the Neta Eisenstein company. This was attained by means of a key and independent corporate framework, and awareness of its existence was hardly ever shared with the plaintiffs and was stored from them.

According to claims created by the undertaking money fund, as a end result of an investigation, they learned that from the starting of 2016, Assaf Eisenstein commenced to “perform a double video game”, in which on the one hand, he functioned in his lots of roles at the Neta Eisenstein business and presented to the plaintiffs untrue shows, proclaiming that the enterprise was reaching the finish of its operations and was to be liquidated while on the other hand, Assaf Eisenstein was working in the shadows with his spouse to transfer the job into the new corporate framework, which he established with Yoni Tzeruya. According to the lawsuit, Eisenstein and Tzeruya were informed of the seriousness of their steps and therefore blurred their identities as entrepreneurs of the duplicated application, doing the job for an extended interval “below the radar.” As a result, as component of the conspiracy that Eisenstein and Tzeruya place jointly, on May 22, 2016, Assaf Eisenstein established the Lusha Methods Ltd.

Through an additional camouflage system, the company’s shares were being not held straight and in the identify of the two “business people.” Fairly, they have been held in believe in, via Y.D.H. Trusts, Ltd. Subsequently, it turned recognized to the plaintiffs that the company’s shares have been held and similarly divided (50-50) by Assaf Eisenstein and Yoni Tzeruya. The organization then merged with yet another firm with the identify DEV YT LTD., which was owned by Tzeruya.

The lawsuit is also based on an skilled viewpoint, which establishes that the essence of the operation, the person interface, and the consumer facet code of each of the two applications are equivalent to fully similar and that “there is no probability of acquiring this amount of similarity, if the new app was designed from scratch… there is no doubt that this is a hurried duplicate/paste of the primary application project.” As if this isn’t enough, the expert, Person Ronen, claims that in features exactly where the two apps existing slight differences in software program, this is an hard work to “camouflage,” the duplication initiatives, as a result of the addition of the Lusha branding inside the opening/closing of the application, has no reasonable justification.

The lawsuit, as stated, indicates that the undertaking capital fund found out that it had been a target of fraud only many thanks to article content in “Globes”, which showcased Lusha and interviewed its CEO Assaf Eisenstein, in December 2021. The plaintiffs uncovered an short article in “Globes” entitled, “We obtained several e-mails from cash, and we mentioned no many thanks: the startup that doesn’t want traders.” The plaintiffs had been astonished to find that the post includes an job interview with Assaf Eisenstein, who clarifies his doctrine with regard to interactions involving entrepreneurs and traders. He is introduced in the report as the individual heading Lusha, and as ‘someone who had managed with no exterior funding until finally six months earlier.’

No comment has still been been given from Lusha.

Printed by Globes, Israel small business information – en.globes.co.il – on Could 8, 2022.

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