Investors sue Israeli unicorn Lusha for 35% stake
6 min readAn unparalleled lawsuit has been submitted in the economic section of the Tel Aviv District Court from Israeli unicorn Lusha, which 6 months in the past, lifted $205 million at a valuation of $1.5 billion. The lawsuit, submitted by Additionally Ventures undertaking cash fund and Oren Abekasis, are suing Lusha and entrepreneurs Assaf Eisenstein, his spouse Anat Eisenstein, and Yoni Tserruya. In the accommodate, Additionally Ventures and Abekasis are demanding rights to a 35% of the firm’s shares.

The match was submitted by Advs. Zohar Lande, Eyal Nachshon, Dana Bookstein, and Naama Ben Aroush Moshe of Barnea Jaffa Lande & Co. legislation company. According to the suit, the Eisensteins and Tserruya fraudulently and at the rear of the backs of the plaintiffs, undertook a method intended to dispossess the fruits of the plaintiffs’ financial commitment and shares, supply them with fake presentations, and to steal from them the promising and lucrative undertaking and product or service in which they invested like their rights and to acquire the enterprise and item, to trade them and reward from the earnings.

The match states that the plaintiffs invested millions of shekels in the Neta Eisenstein company and cumulatively held 35% of its shares and rights. The plaintiffs did these types of out of faith in the company’s items, in its vision, and in its lead entrepreneur, Assaf Eisenstein. Throughout this period, the company concentrated, amongst other matters, on improvement of the merchandise called Community Monkey, a world-wide-web browser incorporate-on, which by means of monitoring and facts from net platforms, assists users in figuring out goal populations suitable to their needs.

In exercise, in its most up-to-date form, from March 2016, the product has been largely intended to serve as an world wide web browser include-on, which permits customers, checking out the LinkedIn web site, to recognize related targets and acquire their particular aspects. The lawsuit states that in the four several years prior to the commencing of 2016, the plaintiffs supported the enterprise in typical and Assaf Eisenstein in individual, and labored with him in purchase to fulfill, produce, use, and advertise the firm’s eyesight and dynamic targets, as nicely as the revolutionary and promising enterprise and product or service that it promoted.

In excess of the years, the plaintiffs invested their money in the undertaking, according to the needs of Assaf Eisenstein who was the entrepreneur, director, CEO and spirit at the rear of the corporation, whilst they relied on his presentations and place their whole rely on in him. In addition to their revenue, the plaintiffs invested their time and knowledge in the firm and advised Assaf Eisenstein.




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“Only in hindsight did it develop into clear to the plaintiffs, to their astonishment, that they ongoing to devote their money and devote methods to the corporation in response to Assaf Eisenstein’s requests, though he labored in the dark and behind their backs, alongside with his spouse, in purchase to dispossess, oust and exclude the plaintiffs, and steal the enterprise and solution in comprehensive from the plaintiffs, and the rest of the company’s traders

“The plaintiffs also found out that at some point, Assaf linked with Yoni Tserruya with the aim of ousting and stealing the whole enterprise and product from the plaintiffs and other organization traders. It is also claimed that it turned distinct to the plaintiffs subsequently that in the commencing of 2016, at the same time that Assaf engaged in wrong representation to the plaintiffs, proclaiming the challenge experienced been concluded and experienced arrive as significantly as it could, Assaf linked to Yoni Tzeruya, and jointly, they set out on a joint venture, with the undertaking and its item at its center.” The two secretly set up a new corporation, while hiding their identification as shareholders, and they transferred the product or service to this new company framework.

It is also claimed that, “Assaf and Yoni utilized the venture’s original enterprise strategy they stole the company’s company secrets and techniques as very well as its technologies, including the primary code of its flagship product or service the two used the company’s important men and women, who secretly moved to jobs at the ‘new venture’ and the two labored in direction of the identical targets, concepts, consumers, purchasers, strategic designs, and development opportunities made at the company they even manufactured use of the plaintiffs’ dollars, which was presented at the commencing to fund the company’s jobs and merchandise.”

The lawsuit claims that the code was established for an equivalent function and is dependent upon an identical code, which underwent blurring and camouflaging. The plaintiffs assert that they did not know of this exercise. The go well with adds that Assaf commenced, as another line of bogus representation and improper functions, jointly with his spouse, who even served as a director of the enterprise, to check out and drive for dismantling and liquidation of the Neta Eisenstein firm, even though hiding significant details from the plaintiffs.

The match claims that on March 18, 2016, the Eisenstein business offered the last model of the products, Network Monkey, which was additional to the Google Chrome application retail outlet. It was subsequently identified that on that precise working day, an similar model of the app, identified as Lusha, was also included to the application store. That product, as the plaintiffs have figured out just lately, was duplicated by Assaf Eisenstein and the growth and internet marketing groups at the Neta Eisenstein enterprise. This was accomplished by way of a solution and individual company framework, and understanding of its existence was under no circumstances shared with the plaintiffs and was retained from them.

In accordance to claims built by the enterprise funds fund, as a result of an investigation, they found that from the commencing of 2016, Assaf Eisenstein began to “perform a double match”, in which on the just one hand, he functioned in his several roles at the Neta Eisenstein enterprise and presented to the plaintiffs bogus presentations, professing that the corporation was reaching the stop of its operations and was to be liquidated even though on the other hand, Assaf Eisenstein was operating in the shadows with his spouse to transfer the project into the new corporate framework, which he founded with Yoni Tzeruya. In accordance to the lawsuit, Eisenstein and Tzeruya had been informed of the seriousness of their actions and therefore blurred their identities as entrepreneurs of the duplicated application, operating for an extended time period “less than the radar.” Hence, as element of the conspiracy that Eisenstein and Tzeruya put with each other, on May well 22, 2016, Assaf Eisenstein founded the Lusha Programs Ltd.

By an supplemental camouflage course of action, the company’s shares were being not held right and in the identify of the two “business owners.” Fairly, they have been held in believe in, by means of Y.D.H. Trusts, Ltd. Subsequently, it grew to become acknowledged to the plaintiffs that the company’s shares ended up held and equally divided (50-50) by Assaf Eisenstein and Yoni Tzeruya. The company then merged with yet another firm with the title DEV YT LTD., which was owned by Tzeruya.

The lawsuit is also based mostly on an expert belief, which determines that the essence of the operation, the consumer interface, and the consumer side code of every single of the two apps are related to totally similar and that “there is no likelihood of obtaining this level of similarity, if the new application was made from scratch… there is no doubt that this is a hurried duplicate/paste of the original computer software undertaking.” As if this is not adequate, the specialist, Guy Ronen, statements that in elements wherever the two applications present minor differences in program, this is an work to “camouflage,” the duplication efforts, by way of the addition of the Lusha branding within just the opening/closing of the app, has no rational justification.

The lawsuit, as stated, suggests that the venture cash fund found that it experienced been a sufferer of fraud only thanks to articles in “Globes”, which highlighted Lusha and interviewed its CEO Assaf Eisenstein, in December 2021. The plaintiffs uncovered an article in “Globes” entitled, “We received numerous e-mail from resources, and we stated no thanks: the startup that isn’t going to want traders.” The plaintiffs ended up impressed to learn that the posting features an interview with Assaf Eisenstein, who describes his doctrine with regard to associations concerning business people and investors. He is offered in the report as the individual heading Lusha, and as ‘someone who had managed with out exterior funding till six months previously.’

No comment has still been gained from Lusha.

Posted by Globes, Israel business enterprise news – en.globes.co.il – on May well 8, 2022.

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