Fraud prevention starts off NS8 hundreds, CEO investigates SEC SEC fraud investigation

Updated: Just a few months after raising more than $ 100 million from venture capital investors, fraud prevention startup NS8 on Thursday took hundreds of employees under investigation for fraud.
In a letter sent to employees, the Las Vegas-based company said Thursday that it was forced to downsize after “sudden and unexpected circumstances”. The letter was Shared On Twitter by local publication Vital Vegas. The startup’s CEO, Adam Rogas, left the company abruptly last week, he confirmed Forbes.

A software engineer who joined the NS8 this year Forbes The employee was informed during an all-hand zoom meeting on Tuesday that the Securities and Exchange Commission was investigating the company for alleged fraud. “We said, and were told, that our finances were not what we thought they were, and would be trimmed,” said the employee, who declined to be named because they were not authorized to speak to the press.

NS8 could not be reached for comment. The SEC declined to comment.

The company announced a $ 123 million Series A round, which was led by global VC firm Lightspeed Partners, just a few months after the NS8’s effective closure. According to data from Startup Tracker Pitchbook, the funding round was valued at over $ 400 million.

Lightspeed said in a statement to Forbes that it is still gathering facts on what has happened. “This is a rapidly evolving situation,” the investor said. “We are surprised by this news and have taken steps to inform our LP. At this time it will be premature to comment further. ”

In a long reply sent to Forbes On LinkedIn, Rogas said he resigned due to family and personal reasons. He alleged that the board and current management of NS8 used “an SEC investigation that began in November of 2019 to describe a more insidious narrative … I did not run with the companies [sic] Money. ”

He said that when NS8 raised the initial $ 50 million of the funds announced in the fall of 2019, the startup was almost out of cash. The remaining funds were raised through a secondary round held by the new investors, Rojas claims. “The company was burning [$4 million to $6 million] Money will run out in a month and in a month or two.
In her response, Rosa expressed disappointment that President Tiffany Kleiman, who was engaged to the startup, “was not given a chance to move the company forward.” But Kleiman, who spoke to the employee Forbes Says, tapped to serve as executive CEO of what’s left for the business.

NS8 was launched in 2016 to provide online fraud detection and prevention software for small businesses. In June, Crunchbase News reported that the company had a 200% jump in annual recurring revenue for 2019. “We are seeing an increased demand of five to six times as a result of rapid e-commerce adoption due to global events,” Rogas told the publication.

The company employed close to 225 people before layoffs; Forbes Could not properly verify how many employees were let go, although a source said several hundred were affected, meaning that many employees would no longer be on NS8. In addition to its headquarters in Las Vegas, NS8 operated offices in Miami, Amsterdam, Singapore, Melbourne, Australia and San Ramon, California.

Roja previously founded or led at least three other software companies. According to their LinkedIn page, he also worked as a venture investor at NextGen Ventures until August. Rogus’ page on the professional network no longer lists his role in NS8.

For outgoing employees, the news of the company’s near-total closure has proved disastrous. The software engineer said while talking, “It was just shock, horror and disappointment.” Forbes. “It’s not a joke.”