Home Business Investors sued Israeli unicorn Lush for 35% stake

Investors sued Israeli unicorn Lush for 35% stake


An unprecedented lawsuit against an Israeli unicorn has been filed in the economic department of the Tel Aviv District Court Lusha, which six months ago raised $ 205 million with an estimate of $ 1.5 billion. The lawsuit, filed by venture fund Plus Ventures and Oren Abekasis, is suing Lusha and entrepreneurs Asaf Eisenstein, his wife Anat Eisenstein and Joni Cerru. In the lawsuit Plus Ventures and Abekasis claim rights to 35% of the company.

The lawsuit was filed through Adv. Zohar Lande, Eyal Nakshon, Dana Bukstein and Naama Ben Arus Moshe of Barnea Jaffa Lande & Co. According to the lawsuit, Eisenstein and Cerruy fraudulently and behind the backs of the plaintiffs began a process aimed at depriving the property of the fruits of investments and shares of the plaintiffs, giving them false ideas and stealing their promising and profitable business. and the product in which they have invested their rights, and for the development of the enterprise and the product, for trade in them and for profit.

The lawsuit alleges that the plaintiffs have invested millions of shekels in Neta Eisenstein and collectively own 35% of its shares and rights. The plaintiffs did so out of faith in the company’s products, in its vision and in its lead entrepreneur Asaf Eisenstein. During this period, the company focused, among other things, on developing a product called Network Monkey, a web browser application that, through monitoring and data from online platforms, helps users identify target populations that meet their needs.

In practice, in its latest form, starting in March 2016, the product was primarily developed as an add-on to an Internet browser that allows users to visit LinkedIn websites, identify relevant targets and receive their personal data. The lawsuit alleges that for four years prior to early 2016, the plaintiffs supported the company in general and Asaph Eisenstein in particular, and worked with him to meet, develop, apply and promote the company’s vision and dynamic goals, as well as innovative and promising enterprise and product which he promoted.

For years, the plaintiffs invested their money in the company as required by Asaf Eisenstein, who was an entrepreneur, director, CEO and company spirit, while they relied on his presentation and fully trusted him. In addition to their money, the plaintiffs invested their time and experience in the company and advised Asaph Eisenstein.

Only recently have the plaintiffs, to their surprise, realized that they continue to invest their money and allocate company resources in response to Asaph Eisenstein’s requests while he worked in the dark and behind their backs with his wife to deprive them of property, evict and exclude plaintiffs, and steal businesses and product in full from plaintiffs and other company investors

“Plaintiffs also found that at one point Asaf contacted Yoni Tseruya to evict and steal the entire business and product from the plaintiffs and other investors in the company. It is also alleged that later the plaintiffs learned that in early 2016, at the same time when Asaf misrepresented the plaintiffs, claiming that the project was completed and went as far as possible, Asaf contacted Yoni Tseruya, and together they set up a joint venture with the project and its product at the center. ”The two secretly set up a new company. while hiding their identity as shareholders, and they moved the product into this new corporate structure.

It is also alleged that “Asaf and Yoni used the company’s original business plan; they stole the company’s business secrets as well as its technology, including the original code of its flagship product; both used key company figures who secretly moved into vacancies in the new company and they worked on the same goals, ideas, users, customers, strategic plans and development opportunities created by the company, they even used the plaintiffs’ money that was provided initially to fund the company’s projects and products. “

The lawsuit alleges that the code was created for an identical purpose and is based on identical code that has undergone blurring and masking. The plaintiffs claim they were unaware of this activity. The lawsuit adds that Asaf started, as another line of misrepresentation and misconduct, along with his wife, who even held the position of company director, to try to seek the dismantling and liquidation of Neta Eisenstein, while hiding essential facts. from the plaintiffs.

The lawsuit alleges that on March 18, 2016, Eisenstein introduced the final version of Network Monkey, which was added to the Google Chrome app store. It was later revealed that on the same day an identical version of the program called Lusha was added to the app store. This product, as the plaintiffs recently learned, was duplicated by Asaf Eisenstein and the development and marketing team of Neta Eisenstein. This was done through a secret and separate corporate structure, and knowledge of its existence was never passed on to the plaintiffs and kept from them.

According to the venture fund, the investigation revealed that in early 2016, Asaf Eisenstein began to “play a double game”, in which, on the one hand, played many roles. in the company Neta Eisenstein and presented to the plaintiffs false testimony, claiming that the company is nearing the end of its activities and should be liquidated; while on the other hand, Asaf Eisenstein worked in the shadows with his wife to move the project into a new corporate framework that he created together with Yoni Tseruya. According to the lawsuit, Eisenstein and Tseruya were aware of the seriousness of their actions and therefore obscured their identity as the owners of the duplicate program, working for a long period “on the radar.” Thus, as part of a conspiracy organized by Eisenstein and Ceruya, on May 22, 2016, Asaf Eisenstein founded Lusha Systems Ltd.

Due to the additional process of disguise, the company’s shares were not held directly in the name of two “entrepreneurs”. Most likely, they were held in trust through YDH Trusts, Ltd. The plaintiffs later learned that the company’s shares are owned and divided equally (50-50) by Asaf Eisenstein and Yoni Tseruya. The company then merged with another company called DEV YT LTD., Which was owned by Cerui.

The lawsuit is also based on an expert opinion, which determines that the essence of functionality, user interface and user-side code of each of the two applications are similar and completely identical and that “there is no chance to get this level like if a new application was developed from scratch … there is no doubt that this is a hasty copy / paste of the original software project. ” As if that weren’t enough, expert Guy Ronen argues that in aspects where the two programs have minor differences in software, it’s an attempt to “camouflage” duplication efforts, through the addition of the Lusha brand within the opening / closing app, has no rationale.

The lawsuit alleges that the venture fund found itself a victim of fraud, only thanks to articles in the “Globe”, which featured Lusha and interviewed its CEO Asaf Eisenstein, in December 2021. The plaintiffs found an article in “Globes” entitled: “We received a lot of emails from the funds, and we said no thanks: a startup that does not want investors.” The plaintiffs were surprised to find that the article contains an interview with Asaf Eisenstein, who explains his doctrine regarding the relationship between entrepreneurs and investors. In the article, he is presented as the person who heads Lusha, and as “someone who ruled for six months before without external funding.”

No comments have been received from Lusha yet.

Posted by Globes, Israeli Business News – en.globes.co.il – May 8, 2022.

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

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