British startup Infogrid successfully spawned a pandemic. The London-based company was helping Britain's National Health Service use its sensors and software to track vaccine temperatures and automate maintenance. After securing support from high-profile investors including SoftBank's Vision Fund, Spotify backer Northzone and commercial real estate giant JLL, CEO William Cowell de Grouchy said the company will The company claimed to be on track to reach $100 million in sales and was looking for its next step. .
Acquiring American rival Aquicore, which had won a big deal to measure and minimize energy use in offices and other commercial buildings, seemed the obvious next move. But there was one sticking point in Cowell de Grouchy's plans to expand to the United States to fuel InfoGrid's “epic growth.” One of them.
Aquicore investor K Street Capital alleges in the lawsuit that it learned InfoGrid would not be able to finance the acquisition two weeks before the deal closed. A March lawsuit filed in Delaware District Court alleges that InfoGrid's actual revenue is only one-third of what Cowell de Grouchy promised. To make matters worse, the business was actually smaller than America's goals.
“After Infogrid induced Aquicore to enter into exclusive negotiations, this false and misleading information about Infogrid's performance was repeated to Aquicore's management and Aquicore's major shareholders,” K Street's attorneys wrote. Daniel A. Griffith of Whiteford, Taylor & Preston wrote in the complaint. “In fact, Infogrid only began retracting these lies several months after the merger was completed.”
InfoGrid has not yet filed a defense but said it intends to contest the lawsuit.
The lawsuit pits K Street Capital, run by Paige Sawyer (husband of Aquicore founder Logan Sawyer), against Cleve Adams (CEO of Aquicore), InfoGrid and other Aquicore investors involved in the acquisition. There is. The lawsuit had not previously been reported.
The Washington, D.C.-based Seed Fund claims it was entitled to a $1.5 million payment in the acquisition under the terms of the AQ-1 convertible note it loaned to the company. After InfoGrid was unable to raise the cash needed for the $43 million deal, the company offered K Street Capital a seller's note at a deep discount, which was subsequently converted into a block of InfoGrid stock. .
“Infogrid lied multiple times, and after over a year later going back on its word rather than receiving $43 million in cash at closing, Infogrid was forced to pay a non-payment amounting to a fraction of AQ-1. “We seek to repay AQ-1 with liquid InfoGrid shares. 1's first Aquicore Note,” the filing alleges.
InfoGrid ultimately raised a reported $90 million in a Series B equity and debt round in April 2023, after laying off approximately 80 staff in January 2023. One InfoGrid investor said the majority of the round was an exchange of previously issued convertible notes rather than new capital. . Cowell de Gruchy later told Techcrunch that Infogrid grew “5x” in 2022, but declined to disclose revenue.
After the merger closes, Cowell de Grouchy told investors during InfoGrid's Series B financing that InfoGrid will generate only $15.1 million in revenue in 2022 and that InfoGrid will generate only $15.1 million in revenue in 2022. It claims that this is only a portion of the $55.8 million in sales that Grid claims to have recorded. In investor materials shared with Aquicore during acquisition negotiations.
Before the acquisition, Cowell de Grouchy predicted that InfoGrid would reach sales of $261 million in 2023. The company appears to have significantly missed this goal. Cowell de Grouchy told investors in January that the combined business had a profit of just $15 million last year. K Street Capital noted in its complaint that Aquicore was earning $7 million a year before the acquisition. Cowell de Grouchy will step down as Infogrid's CEO in 2023 and as a director in February 2024, according to UK company filings.
K Street Capital also alleges that Aquicore CEO Adams pushed through the deal with InfoGrid knowing that the revenue was being inflated in order to receive a multimillion-dollar bonus that would be paid upon closing of the deal. are doing.
Cowell de Grouchy did not respond to requests for comment.