Marketing Startup Accused of Trying to Cut Out Early Investors

More than a dozen venture capital investors accuse a marketing technology startup they funded of “scheming” to terminate their right to convert their investments into equity.

Vistar Media Inc. specifically structured its subsequent financing transactions to avoid triggering any of the contingencies that would have automatically converted the early investors’ promissory notes into common stock, according to the March 13 complaint filed in Delaware Chancery Court.

They then tried to force the investor plaintiffs to accept repayment with minimal interest to head off the looming conversion of their notes into equity, the suit claims.

“Vistar then attempted to trick plaintiffs ...