Joonko on verge of shock closure; Board claims CEO "engaged in fraudulent conduct"
Joonko on verge of shock closure; Board claims CEO "engaged in fraudulent conduct"
According to a statement from the Joonko board, CEO Ilit Raz “was found to have engaged in egregious, unethical and fraudulent conduct, which caused harm to the company and its shareholders.” Joonko raised a $25 million Series B last September led by Insight Partners, with support from Target Global
Israeli startup Joonko, which has developed an automated sourcing platform focused solely on underrepresented candidates, is on the verge of a shock closure. An investigation conducted by the company's board of directors and investors revealed that the number of its real customers differed significantly from the number reported by its managers to the investors. In those reports, the company stated that it has 150 customers, when in practice the number was significantly smaller.
The company's CEO Ilit Raz and a number of senior executives have already left the company in recent weeks and most of the company's employees have been called in for a hearing ahead of their dismissal.
According to a statement from the Joonko board, “The CEO was found to have engaged in egregious, unethical and fraudulent conduct, which caused harm to the company and its shareholders.”
Joonko raised a $25 million Series B last September led by Insight Partners, with support from Target Global and existing investors, including Kapor Capital. The company, which has raised a total of $38 million to date, employed around 50 people at its peak and it remains unclear how many will remain following the extensive layoffs.
“Insight does not tolerate, and our investors expect us to take seriously, any findings of misconduct, deceit or unlawful activity at our firm or any of our portfolio companies,” Insight Partners said in a statement.
Ilit Raz and the company did not respond to requests for comment.
Joonko’s recruitment solution assists companies in achieving their diversity, equity and inclusion goals through its ecosystem that identifies and suggests pre-qualified candidates from across a range of underrepresented sectors, saving recruiters time on sourcing, attracting, and validating relevant candidates. Joonko connects with the applicant tracking systems of partner companies to spot pre-qualified candidates and resurface them as recommended talent anywhere in the Joonko ecosystem.
According to previous announcements by Joonko, employers like Adidas, Accenture, American Express, Crocs, PayPal, Northwestern Mutual, and Intuit rely on its automated sourcing platform.
“The company was recently made aware of misstatements in the financial reporting of the company. Specifically, the board and other executive officers of the company lost confidence in the CEO’s ability to deliver on repeated requests to develop and support an internal finance function as part of the maturation of the company and its business,” Joonko’s board said in a statement. “As a result, the board and other executive officers of the company carried out an extensive review of the CEO’s performance. The CEO was found to have engaged in egregious, unethical and fraudulent conduct, which caused harm to the company and its shareholders. The CEO was confronted with the findings of the investigation, and she voluntarily resigned in response. The extent of the situation remains under investigation and next steps are under consideration.”
Insight Partners said in a statement: “Insight takes pride in being a supportive partner for entrepreneurs and leadership teams on their growth journey and has an unwavering commitment to upholding the highest standards of ethics, accountability, and responsible leadership.
“Insight does not tolerate, and our investors expect us to take seriously, any findings of misconduct, deceit or unlawful activity at our firm or any of our portfolio companies.
“The company's board of directors stated that the CEO was found to have engaged in blatant, unethical and fraudulent conduct that caused damage to the company and its shareholders. The CEO confronted the findings of the investigation and voluntarily resigned in response. The scope of the situation is still under review and the next steps are being considered.”
