Soon after selling her 6-year-old startup Knoq Inc. to digital media company Ad Practitioners LLC earlier this year, Kendall Hope Tucker compared the deal to a fairy tale.
"M&A announcements like ours sound amazing and serendipitous," the Boston entrepreneur wrote in a blog post. "A large company met a small startup, it was a match made in heaven, and now they are living happily ever after like Cinderella and her unnamed Prince."
But the marriage between the two companies has taken a plot twist that's hardly fit for a happily-ever-after ending: a federal lawsuit alleging fraud and discrimination.
An attorney representing Tucker, who started Boston-based Knoq (formerly Polis) in 2015, filed the lawsuit against Ad Practitioners July 29. Greg Powel, Ad Practitioners CEO, and Ian Robertson, the company's head of finance and operations, are also named as defendants.
Tucker is suing over alleged breach of contract, fraud and "related causes of action."
"I poured five years of my heart, soul and energy into building Knoq and only agreed to the acquisition based on specific promises made to me," Tucker, 29, wrote in a statement emailed to the Business Journal. "I have always hated the idea of being involved in a lawsuit, but unfortunately I never thought a situation would play out like this one has."
Ad Practitioners' Powel and Robertson did not respond to multiple requests for comment on the lawsuit. Tucker is represented by Dhillon Law Group Inc. of San Francisco.
The case
In a civil complaint in the U.S. District Court of Puerto Rico, Tucker claimed that the defendants unlawfully tricked her into selling her company under false pretenses. Tucker alleged Powel and Robertson misled her about the compensation the Knoq team and its investors, including Tucker, would receive after the sale, according to the complaint.
Ad Practitioners acquired Knoq in a deal that became public in February. Ad Practitioners is based in Dorado, Puerto Rico, owns brands like Money.com and ConsumersAdvocate.org. The acquisition of sales-tech startup Knoq was meant to help Ad Practitioners better reach consumers and its audience. Terms of the acquisition were not disclosed publicly.
The Knoq team moved to Puerto Rico and put together a guide on moving to Puerto Rico with an unnamed new employee, according to the complaint. Powel told Tucker the guide was not "culturally sensitive," according to the lawsuit, and that she "didn’t want to be known around the office as ‘a bitch.'” The lawsuit does not specify how the guide was culturally insensitive.
Powel allegedly told Tucker that he “did not like [her] voice on social media” because “[she] talked too much about being a ‘female founder’ and what [she] had learned throughout her startup journey,” according to the lawsuit.
Tucker reported Powel to Robertson, who allegedly failed to act, the lawsuit states. Tucker was terminated by Ad Practitioners in April, three days after she sent an email to Ad Practitioners' HR, according to the complaint.
After her termination, the company presented her with a separation agreement asking her to agree that her termination was “for just cause,” the complaint reads. The company offered her $75,000 in exchange for a release of all claims, including for any additional compensation to which she was entitled, according to the lawsuit.
From Polis to Knoq
Tucker started her company in 2015 as a door-to-door canvassing app to help campaigners and politicians keep better track of their door-knocking campaigns. The startup, which was part of the Techstars Boston spring cohort in 2016, went on to raise its first seed round the following year and expanded its software to help businesses with door-to-door sales operations.
Haystack VC, a San Francisco–based seed-stage venture capital firm that invested in DoorDash Inc. (NYSE: DASH) and Instacart, in 2019 led the startup's first VC-led round at $2.5 million. At that time, the company was based in Harvard Square with a team of 19 people.
The rebranding from Polis to Knoq came last year, when Knoq — which went on to be named one of BostInno's Startups to Watch in 2020 — said it was focused on "neighborhood outreach." By then it reported more than 37 neighborhood representatives knocking on people's doors to pitch different products and services.
Overall, Knoq had raised a total of $6.5 million and had grown to over 60 employees, according to court documents.
"The best outcome would be for Ad Practitioners to honor its promises, pay what it owes and for any damages it has caused me, so that we can all move on," Tucker wrote in a statement about the lawsuit.
The news of the lawsuit was first reported by Protocol.
