SaaS Firm CEO Resigns; Layoffs, SEC Investigation Follow
NS8, a Las Vegas-based online fraud prevention and detection software maker for small and medium-sized businesses (SMBs), has begun layoffs following the abrupt resignation of its CEO.
The Las Vegas Review-Journal reported that Adam Rogas resigned on Sept. 1 “with immediate effect,” according to James Holborown, the company’s vice president of communications.
“As a result, the board of directors has launched an internal investigation,” Holborown said in a statement. “As this is still an active investigation, we are not providing any detail at this point.”
The startup also confirmed on Friday (Sept. 11) that its 225-person workforce would be significantly downsized, as Genevieve Haldeman, the company’s spokeswoman, told the newspaper. The move has caused turmoil and prompted an in-house investigation at the software-as-a-service (SaaS) solution platform.
NS8’s decision to trim jobs was prompted by “initial findings of that investigation,” Haldeman said. She declined to provide details of the investigation. But a source who recently joined NS8 told Forbes that employees were informed during a Zoom meeting on Tuesday (Sept. 8) that the Securities and Exchange Commission (SEC) was investigating the company for alleged fraud.
“We … were told that our finances were not what we thought they were, and there would be layoffs,” said the employee, who declined to be identified.
In response to Forbes via LinkedIn, Rogas said he resigned for family and personal reasons. He alleged that NS8’s board and management have used an SEC investigation that began last year to suggest a more deceitful narrative.
“I did not walk away with the company’s money,” he told Forbes. “The company was burning $4 million to $6 million a month and was going to run out of money in a couple of months.”
Founded in 2012 with 50 employees, the company grew to more than 200 workers within the last year. In June, NS8 closed a Series A funding round for $123 million, led by Lightspeed Venture Partners, the Menlo Park, California-based venture capital firm, with additional funding from Paris-based venture capital firm AXA Venture Partners. The firm said the investment will allow the company to continue to grow product development and hires in sales, engineering, marketing and infrastructure staff.
In a statement to Forbes, Lightspeed said it is still gathering information on what has occurred.
“This is a rapidly evolving situation,” the investor said. “We are shocked by the news and have taken steps to inform our LPs. It would be premature to comment further at this time.”