An entrepreneur is suing Urban Compass, claiming that the real estate startup stole his product and business model. The lawsuit comes days after Urban Compass was valued at $360 million, following a $40 million funding round.
According to The Real Deal, Avi Dorfman claims that he met with Urban Compass CEO Robert Reffkin in 2012 to discuss funding for his startup, the now defunct site RentJolt. The lawsuit alleges that Reffkin suggested that they become partners instead. The two agreed that Reffkin would acquire RentJolt and create a new company, which eventually became Urban Compass, signing a non-disclosure agreement which stated that Dorfman would be a co-founder and would have a sizable stake in the new company.
The suit states that Dorfman then gave Reffkin access to RentJolt's business model, that he was instrumental in securing $6 million in seed funding from Goldman-Sachs, and that he was involved in luring Silicon Valley entrepreneur Ori Allon to the fledgling company. Allegedly, Reffkin "took those trade secrets" and "exploited this process and knowledge and disposed of Dorfman," following a round of negotiations over Dorfman's stake and base salary.
"Any time a company experiences success, there are going to be individuals attempting to opportunistically exploit it," Urban Compass exec Sofia Song told The Real Deal. "We believe this claim does not have any merit, and we look forward to the opportunity to substantiate that."
Dorfman's attorney Adam Ford, a partner with Harris, O'Brien, St. Laurent & Chaudhry, said the filing of the complaint had nothing to do with Urban Compass' latest funding round.
"We have been attempting to settle this with the company for quite some time and we finally realized neither Urban Compass nor Reffkin were interested and now is the time to file," Ford said.
· "Urban Compass stole trade secrets: lawsuit" [TRD]
· All Urban Compass coverage [Curbed]