Khosla, Nextdoor SPAC Backers Hit With Lawsuit on Public Listing

Vinod Khosla and other architects of Nextdoor Holdings Inc.'s blank-check merger duped investors into a doomed deal that gave insiders a windfall, according to a lawsuit challenging the transaction.

A shareholder sued the tech billionaire and other sponsors of the merger, saying they were driven by lopsided incentives to hype the social network’s waning prospects by downplaying the boost it got from pandemic lockdowns. The 2021 deal took Nextdoor public by combining it with a special purpose acquisition company.

The case is the latest of scores challenging SPAC mergers since the wave of blank-check deals began to recede from a ...