Misha Saul, the head of EVP’s Opportunities Fund, has gone quiet after the first startup he invested in collapsed amid controversy. The fund’s early investment in StrongRoom AI, a medication management software company, faced a sudden downfall due to solvency concerns just two weeks after a funding round led by EVP that valued the company at $70 million. EVP had withdrawn from the medtech company’s $17 million funding round following alleged financial discrepancies.
“EVP is deeply concerned about recent developments regarding one of its investment companies and we have taken immediate action including notifying law enforcement and pursuing all available avenues to recover the investment,” a spokesperson said. The rapid decline of StrongRoom AI has been described by other venture capitalists as “your worst nightmare,” underscoring the unpredictable and risky nature of venture capital investments. Aaron Michelin, a director of Tyson & Blake, has flagged potential legal action against EVP, which invested $10.4 million in StrongRoom AI in February.
Shortly after the investment, EVP requested its money back, leading to financial investigators getting involved. EVP then took legal action to freeze assets worth up to $10.44 million against 13 defendants, including the company, its administrators, receivers, and several board members. In an open letter, Michelin accused EVP of engaging in a “public scapegoating campaign,” targeting the CEO instead of managing the issue internally.
He criticized the firm for failing to notify or engage with other shareholders, which he believes violated the signed shareholder agreement.
evp legal troubles continue with strongroom
Michelin continues to stand by StrongRoom AI, describing it as “one of the most promising companies” discovered by his firm.
The company, cofounded by Christopher Durre, Kieran Start, and Max Mito in 2017, developed medication management software aimed at helping pharmacists document prescriptions and manage transactions. Despite acknowledging the possibility of accounting irregularities or reporting errors, Michelin dismissed any indications of fraudulent intent. He criticized EVP for not employing third-party auditors during their due diligence, noting this as a possible reason for the dispute.
Last week, EVP issued a statement noting that it was reviewing its due diligence processes to prevent future issues. Michelin stated that Tyson & Blake remain committed to helping StrongRoom recover and grow, and warned EVP of potential legal consequences for the financial and reputational damage inflicted on the company. The dispute has garnered the attention of numerous stakeholders, as StrongRoom AI has more than 70 shareholders across various regions, including Japan, the US, UK, and Australia.
At stake is $32 million worth of funding, in addition to the original $10.4 million investment. The matter remains unresolved, with further court proceedings expected soon. EVP declined to comment on the pending legal battle.
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