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OrderUp founder sued by angel investors

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Posted at 5:45 PM, Jun 03, 2016
and last updated 2016-06-03 17:45:39-04

It's the phone app that makes food delivery even more convenient than it already is. OrderUp is a meal-delivery service where in just a few swipes you can have a dish from your favorite restaurant at your doorstep.

The local start-up has found great success, but now it's being sued for allegedly cheating some angel investors out of big payday.

According to the lawsuit filed May 23 in U.S. District Court for the Southern District of New York, four investors claim OrderUp co-founder Christopher Jeffery misled them into believing that due to competition, the company wasn't going to do well financially.

"These were angel investors, who were in on the ground floor of this company, and like all angel investors were hoping to hit a homerun, but just as the company was about to hit that homerun they were told that the company was not going to do very well financially and that they should sell back their interests because if they waited a year they might get nothing at all," said Robert Bernstein, the attorney representing the four investors.

They sold back their $850,000 worth of equity interests back in April 2014. Last July, Groupon acquired the Canton business for nearly $80 million, according to the lawsuit.

"Hopefully this kind of a lawsuit will send a message to all young entrepreneurs that they need to treat their angel investors with the same care, goodwill, and good faith that they would treat those who come forward later offering them even more money, and that angel investors are the key lubricant to an innovative society," Bernstein said. "These are the people who risk their capital when no one else will on ideas that they think have merit when no one else does. And so, they're entitled to be rewarded when their investments are about to pay off."

The investors are suing Jeffery and the company for unspecified damages.

OrderUp could not be reached for comment.