This is an anonymous post from an Elpha member.

Class Action Lawsuit against a Startup - how will it impact future fundraising for the startup & its CEO's future startups?

Alice67·May 10, 2020

I work for a startup that just had a class action lawsuit filed against it (not as a founder, just as staff). I am wondering if/when I should jump ship. How does having a class action lawsuit filed against a startup affect a startup's future fundraising abilities? Will they be able to raise VC funding while the lawsuit is pending? When do startups have to disclose the lawsuit to potential investors? If the lawsuit settles without going to trial or without a lot of press, is there a chance the startup could leave the process relatively unscathed? If the lawsuit sinks the company, will the founders be able to start a new company again without having to disclose the lawsuit from the prior startup? I am also concerned that if this gets in the media, having this company on my resume will hurt me .

cadran·May 11, 2020

cc-ing @Aravinda

sfkts·May 12, 2020

Not sure if you are in the Blockchain/Crypto world .. if you are .. this is normal. I would get a job and leave.

Alice67·May 12, 2020

Thanks! I'm not in blockchain or crypto. In my industry, small claims lawsuits are normal. But class actions are not. This is unprecedented in my industry. The lawsuit is being lead by a reputable law firm, and they seem to have a strong case.

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