Here’s What Happens to a Startup After Sexual Harassment Scandal

BetterWorks Systems Inc. isn’t a well-known name in Silicon Valley, but the startup achieved a moment of infamy last year that it hasn’t been able to shake. A former employee sued the company in July, claiming the chief executive officer sexually harassed and assaulted her and that management failed to take proper disciplinary action. The allegations were levied as the #MeToo movement was mushrooming, and the fallout at BetterWorks was widespread.

Kris Duggan, the 43-year-old CEO, has disputed the allegations but resigned from the company he co-founded. Fundraising efforts were derailed. A dozen customers severed business relationships with the startup, ...