Joonko, an Israeli-founded startup that has developed an AI-based software recruitment platform to help bring diversity into the workplace, has allegedly misled investors according to an investigation that found that its founder and CEO has been engaged in “fraudulent conduct.”
According to an extensive probe by Joonko’s board of directors and some of its investors, Ilit Raz, the Israeli founder and CEO of the startup, was found to be “engaged in egregious, unethical and fraudulent conduct, which caused harm to the company and its shareholders.”
In response to the allegations, Raz “voluntarily” resigned and left the company, Joonko’s board of directors said in a statement. In addition, the startup’s senior executives are understood to have left the startup in recent days and most of its employees have been summoned for a hearing ahead of their dismissal, according to Hebrew press reports.
“The extent of the situation remains under investigation and next steps are under consideration,” the statement read.
The startup’s board said the investigation was launched to review the CEO’s performance following “misstatements in the financial reporting of the company.”
“Specifically, the board and other executive officers of the company 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,” Joonko’s board stated.
Raz founded Joonko in 2016, saying that as a woman in tech she had personally witnessed the major roadblocks to the hiring of underrepresented talent and sought to harness AI technology help bring diversity to the workplace.
Named after Japanese mountain climber Junko Tabei, who became the first woman to reach the summit of Mount Everest in 1975, Joonko developed AI-based software that pinpoints qualified candidates and matches them to suitable roles among companies with which it partners. The company does this by building a large talent network of vetted candidates, across sectors, with an emphasis on potential employees from underrepresented communities.
Through Joonko’s tech platform, companies and businesses can access the network to recruit candidates for different positions, track analytics to improve their strategy, and deploy personalized rejection letters to candidates who didn’t make the cut as “a graceful farewell” that extends further opportunities (with an offer to join the Joonko network and get matched with relevant roles). Joonko then gets top candidates into its talent pool.
Albrey Brown, the startup’s US general manager and VP of strategy, told The Times of Israel in November that Joonko had 130 customers, including companies such as Nike, American Express, Adidas, PayPal, and Crocs, using its platform. There were about 170,000 candidates every month applying for jobs, Brown said.
As recently as September last year, Joonko raised $25 million from a Series B funding round led by venture capital firm Insight Partners, with support from Berlin-headquartered firm Target Global and existing investors Kapor Capital and Vertex Ventures Israel. With the proceeds of the round, the startup was planning to expand its New York team and boost marketing and sales to increase activities in the US. The round brought the total amount of funds raised by the startup to $38 million.
“Insight 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 venture capital firm said in a statement.
Headquartered in New York, Joonko also has an R&D center in Israel and employed 36 people as of November last year.