Joonko, a New York City-based startup that created an AI-powered job board to improve diversity in hiring, is on the brink of collapse after its CEO allegedly duped investors with an elaborate scheme to exaggerate the size of the company’s business.
Joonko founder and CEO Ilit Raz resigned after an internal probe found she had “engaged in egregious, unethical and fraudulent conduct, which caused harm to the company and its shareholders,” the startup’s board of directors said in a statement obtained by The Post.
Raz allegedly misled investors by claiming Joonko was working with 150 companies “when in practice the number was significantly smaller,” according to Israeli tech news outlet CTech, which first reported on the allegations against Raz.
News of Raz’s alleged scheme — which comes after the company raised $25 million in cash from investors last fall — included the submission of fake invoices that were attributed to real people at real companies, fake wire transfers and even fake bank accounts, a source with knowledge of the situation told The Post.
“It really is one bad actor. It’s staggering, the individual [wrongdoing] and the level of sophistication of the CEO,” the source said.
Raz and other representatives for Joonko did not immediately return The Post’s request for comment. Joonko’s email address appeared to be disabled as of Monday morning.
Joonko unveiled its $25 million Series B fundraising round to some fanfare in September, drawing coverage by Insider and TechCrunch. At the time, the startup said it planned to use the funds to ramp up hiring at its Manhattan headquarters.
A September press release touted “remarkable growth” at Joonko under Raz’s leadership “with 500% growth in sales for two consecutive years.”
“I learned very early on that it’s important to pitch Joonko as a business,” Raz told Insider last September. “Once you can prove that your message is able to stand up itself in terms of metrics, then you can raise from major players.”
The startup claims to have more than 150,000 job candidates within its platform. “Partner companies” listed on its website include corporate giants such as Adidas, Nike, Intuit, PayPal and American Express.
Financial backers for last fall’s $25 million fundraising round included prominent venture firms Insight Partners, Target Global, Kapor Capital and Vertex Ventures.
Raz’s alleged misdeeds are believed to have ramped up after Joonko secured the fundraising round and the firm faced pressure to drive revenue. The board is still investigating Joonko’s financial growth metrics over the last year to assess their accuracy, the person added.
Ahead of the round, Insight Partners conducted a comprehensive due diligence effort that included financial audits, customer calls and background checks – and did not uncover anything amiss, a person familiar with the investment told The Post.
In a statement, Insight Partners said it “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 private equity firm added that the “scope of the situation is still under review and the next steps are being considered.”
In total, Joonko has raised about $38 million in outside funding.
Sources told Israel-based outlet Globes that the funding round “probably shouldn’t have happened” based on what was uncovered during the internal probe.
Several other top executives at Joonko have also reportedly left the company in recent days, sources said.
The Post reached out to several Joonko investors and advisers for comment, but did not hear back at the time of publication.
Founded in 2016, the startup was named after Junko Tabei, the first woman to reach the summit of Mount Everest. Joonko billed itself as a platform that allows companies to boost their diversity, equity and inclusion (DEI) efforts in the workplace.
Joonko’s board of directors said it was “recently made aware of misstatements in the financial reporting of the company” and had “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.”
“The CEO was found to have engaged in egregious, unethical and fraudulent conduct, which caused harm to the company and its shareholders,” the board’s statement added. “The CEO was confronted with the findings of the investigation, and she voluntarily resigned in response.”
The board said the “extent of the situation remains under investigation and next steps are under consideration.”
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