Investors sue Israeli unicorn Lusha for 35% stake
An unprecedented lawsuit has been submitted in the financial division of the Tel Aviv District Court versus Israeli unicorn Lusha, which six months ago, elevated $205 million at a valuation of $1.5 billion. The lawsuit, submitted by In addition Ventures enterprise funds fund and Oren Abekasis, are suing Lusha and business owners Assaf Eisenstein, his spouse Anat Eisenstein, and Yoni Tserruya. In the fit, Moreover Ventures and Abekasis are demanding legal rights to a 35% of the company’s shares.

The match was filed by way of Advs. Zohar Lande, Eyal Nachshon, Dana Bookstein, and Naama Ben Aroush Moshe of Barnea Jaffa Lande & Co. law organization. According to the accommodate, the Eisensteins and Tserruya fraudulently and driving the backs of the plaintiffs, undertook a procedure meant to dispossess the fruits of the plaintiffs’ expenditure and shares, present them with fake shows, and to steal from them the promising and rewarding enterprise and products in which they invested which includes their rights and to develop the enterprise and product or service, to trade them and benefit from the revenue.

The go well with states that the plaintiffs invested tens of millions of shekels in the Neta Eisenstein organization and cumulatively held 35% of its shares and rights. The plaintiffs did such out of religion in the company’s products, in its vision, and in its lead entrepreneur, Assaf Eisenstein. During this period of time, the business targeted, amid other factors, on development of the product named Community Monkey, a world wide web browser increase-on, which by monitoring and data from world wide web platforms, helps users in determining concentrate on populations suitable to their wants.

In practice, in its newest type, from March 2016, the product or service has been generally developed to provide as an web browser incorporate-on, which permits end users, browsing the LinkedIn web site, to establish relevant targets and receive their particular details. The lawsuit states that in the 4 years prior to the commencing of 2016, the plaintiffs supported the organization in common and Assaf Eisenstein in distinct, and worked with him in purchase to fulfill, establish, apply, and market the company’s eyesight and dynamic targets, as nicely as the impressive and promising venture and solution that it promoted.

In excess of the yrs, the plaintiffs invested their money in the venture, in accordance to the calls for of Assaf Eisenstein who was the entrepreneur, director, CEO and spirit behind the firm, even though they relied on his presentations and place their whole trust in him. In addition to their funds, the plaintiffs invested their time and working experience in the business and advised Assaf Eisenstein.




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“Only in hindsight did it develop into obvious to the plaintiffs, to their astonishment, that they continued to spend their cash and dedicate resources to the corporation in reaction to Assaf Eisenstein’s requests, though he labored in the dim 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 relaxation of the company’s traders

“The plaintiffs also discovered that at some stage, Assaf connected with Yoni Tserruya with the goal of ousting and stealing the overall venture and products from the plaintiffs and other company traders. It is also claimed that it turned very clear to the plaintiffs subsequently that in the commencing of 2016, at the similar time that Assaf engaged in wrong illustration to the plaintiffs, boasting the undertaking experienced been concluded and had occur as considerably as it could, Assaf related to Yoni Tzeruya, and together, they established out on a joint venture, with the undertaking and its merchandise at its centre.” The two secretly proven a new company, while hiding their identity as shareholders, and they transferred the product to this new company framework.

It is also claimed that, “Assaf and Yoni employed the venture’s authentic organization approach they stole the company’s business enterprise secrets as nicely as its technologies, such as the original code of its flagship item the two used the company’s vital people today, who secretly moved to work at the ‘new venture’ and the two worked in the direction of the exact same targets, thoughts, end users, clients, strategic strategies, and advancement alternatives created at the company they even produced use of the plaintiffs’ dollars, which was offered at the starting to fund the company’s projects and products and solutions.”

The lawsuit claims that the code was designed for an equivalent intent and is dependent upon an identical code, which underwent blurring and camouflaging. The plaintiffs declare that they did not know of this activity. The match adds that Assaf commenced, as an additional line of untrue representation and incorrect activities, alongside one another with his wife, who even served as a director of the business, to check out and force for dismantling and liquidation of the Neta Eisenstein firm, while hiding considerable details from the plaintiffs.

The fit promises that on March 18, 2016, the Eisenstein organization presented the ultimate edition of the product, Community Monkey, which was added to the Google Chrome app keep. It was subsequently found out that on that specific working day, an identical edition of the app, referred to as Lusha, was also extra to the application retail store. That products, as the plaintiffs have figured out recently, was duplicated by Assaf Eisenstein and the development and promoting groups at the Neta Eisenstein organization. This was attained by means of a mystery and individual corporate framework, and awareness of its existence was in no way shared with the plaintiffs and was retained from them.

In accordance to statements designed by the venture cash fund, as a outcome of an investigation, they uncovered that from the starting of 2016, Assaf Eisenstein started to “play a double activity”, in which on the a single hand, he functioned in his lots of roles at the Neta Eisenstein business and offered to the plaintiffs phony shows, proclaiming that the firm was achieving the stop of its functions and was to be liquidated even though on the other hand, Assaf Eisenstein was operating in the shadows with his wife to transfer the undertaking into the new corporate framework, which he recognized with Yoni Tzeruya. In accordance to the lawsuit, Eisenstein and Tzeruya were being informed of the seriousness of their actions and consequently blurred their identities as owners of the duplicated app, working for an prolonged period “below the radar.” So, as section of the conspiracy that Eisenstein and Tzeruya set alongside one another, on May 22, 2016, Assaf Eisenstein proven the Lusha Units Ltd.

Through an extra camouflage process, the company’s shares were not held immediately and in the identify of the two “entrepreneurs.” Fairly, they have been held in belief, by way of Y.D.H. Trusts, Ltd. Subsequently, it grew to become regarded to the plaintiffs that the company’s shares were being held and equally divided (50-50) by Assaf Eisenstein and Yoni Tzeruya. The firm then merged with one more enterprise with the identify DEV YT LTD., which was owned by Tzeruya.

The lawsuit is also based mostly on an qualified impression, which establishes that the essence of the performance, the person interface, and the user aspect code of every of the two applications are related to fully equivalent and that “there is no probability of getting this amount of similarity, if the new app was made from scratch… there is no question that this is a hurried duplicate/paste of the original program venture.” As if this is not adequate, the skilled, Male Ronen, claims that in facets exactly where the two apps current insignificant differences in computer software, this is an effort to “camouflage,” the duplication attempts, via the addition of the Lusha branding within the opening/closing of the application, has no rational justification.

The lawsuit, as said, implies that the enterprise capital fund found that it had been a sufferer of fraud only many thanks to articles or blog posts in “Globes”, which featured Lusha and interviewed its CEO Assaf Eisenstein, in December 2021. The plaintiffs located an article in “Globes” entitled, “We obtained many email messages from resources, and we stated no many thanks: the startup that will not want investors.” The plaintiffs were being shocked to uncover that the short article features an interview with Assaf Eisenstein, who explains his doctrine with regard to associations among business owners and investors. He is introduced in the posting as the man or woman heading Lusha, and as ‘someone who experienced managed devoid of external funding until finally 6 months previously.’

No comment has however been gained from Lusha.

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

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


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