Uh Oh! Crowdfunding Site Gets Sued

Crowdfunding Provider Sued by Competitor

On Friday, news broke that DealMaker Tech had issued a lawsuit against Issuance.

But let’s take a step back, because most of you probably have never heard of these companies

There are two types of crowdfunding options for startups, they can choose to raise money through Portals or White Labels

• Portals are what consumers are more familiar with, these are sites that host multiple equity crowdfunding raises on a singular site. They each have communities of investors that typically make up a portion of the funds raised. Wefunder, StartEngine, and Republic are all examples of Portals

• White Labels are software providers that simply offer the digital ‘pipes’ for startups to receive investments on their own website. When a startup uses a white label service, it appears as if they are the ones hosting their own round.

DealMaker Tech + Issuance are examples of White Labels. And DealMaker is now suing Issuance. Let’s get into it…

DealMaker Let the Wolf into the Hen House

The founder + CEO of Issuance, Darren Marble, approached DealMaker in 2022 about a potential strategic partnership

DealMaker alleges that Marble was looking for DealMaker to provide the digital infrastructure for Issuance to offer its own White Label fundraising service to startups

Marble controlled a separate entity called Pieta LLC, and entered into a White Glove agreement with DealMaker at around the same time to raise funds & test their capabilities

In July of 2022, the Pieta offering launched through DealMaker. Less than a year later, the partnership was in tatters and DealMaker was suing Marble for fraudulent inducement

How Best Friends Became Enemies

Four months after Pieta LLC launched its fundraising round, Marble decided to close the offering. Which is a normal thing to do…except for one small detail:

Not a single person invested.

DealMaker reports that not a single individual funded or confirmed an investment in the 4-month stretch

Later that month, Marble goes on to release Issuance Express, a directly competing product to DealMaker

In DealMaker’s lawsuit, they allege that Marble entered into an agreement with DealMaker under false pretenses in order to obtain an up-close view of the technology, which he then used to clone a competing product

Essentially, DealMaker is saying that the Pieta raise was a complete sham used to steal their proprietary software product

We reached out to Marble for comment, and he issued the following statement:

What Happens Next?

I’m not a legal scholar & this is a developing story, so I have no idea what happens from a legal standpoint

What Marble (allegedly) did isn’t going to win any gold stars from the ethics department, but I’m not entirely sure that what he did is illegal

It is a bit of a black eye on the industry to see two providers caught up in a legal spat, and the court battle will certainly detract dollars & focus away from building out the crowdfunding eco-system

I’ll be tracking this story closely and posting updates on the Crowdscale Twitter account

Lastly, it really means a lot to me if you are able to ‘heart’ this story - thanks for reading!

I have to apologize…

Last week I teased that this week’s edition would feature a Crowdscale Rating for a potentially hot startup investment

But today I must confess that I overpromised and under-delivered ☹️

I had posed several questions to the founder of Calibre, a company that sells fitness trackers that allow you to analyze the data in your breath.

I listed a total of 9 questions on their investment page, as some very basic information was missing from their pitch.

I had expected to receive a response, but it has been 14(!) days with no answer

I do not feel comfortable providing a Crowdscale Rating until I have all the information - but if you’d like to check out the raise for yourself, you’re more then welcome to here