Established in 2018, UK-based smart building firm Infogrid quickly made a splash in the market, picking up a range of high-value customers including banks, supermarkets, and restaurant chains, as well as the UK’s National Health Service (NHS) during the peak of the global pandemic.

The firm has attracted $135.5m in investment (including debt financing) from JLL Spark, Spotify backers Northzone, and SoftBank’s Vision Fund (now known for backing several public failures like WeWork and Katerra), which triggered the firm’s CEO at the time, William Cowell de Gruchy, to claim the company was experiencing “epic growth” and was on track to hit $100 million in revenue in 2022.

In November 2022, Infogrid announced the acquisition of US-based company Aquicore for what we now know to be $43 million, allowing them to expand into the large US real estate market. However, a lawsuit filed last month at the District Court of Delaware, claims that Infogrid didn’t have the money for the deal, they were nowhere near the valuation they had stated, and they were, in reality, a smaller company than the one they were trying to acquire.

In the lawsuit, key Aquicore investor K Street Capital claims that they only learned two weeks before the deal closed that Infogrid was unable to finance the takeover. And goes on to claim that Infogrid’s true revenues were only a third of what Cowell de Gruchy had promised.

“This false and misleading information concerning Infogrid’s performance was repeated to Aquicore’s management team and major Aquicore noteholders… after Infogrid induced Aquicore to enter into exclusive negotiations,” Daniel A. Griffith of Whiteford Taylor & Preston, K Street’s attorney, wrote in the complaint and published in a Forbes article. “In fact, Infogrid only began to backtrack these lies months after the merger closed.”

On one side of the complex lawsuit is K Street Capital, and on the other is Cleve Adams (Aquicore’s then-CEO), Infogrid, and other investors involved in the takeover. K Street Capital claims that it was entitled to a $1.5 million payout from the takeover but after Infogrid failed to raise the cash it offered a seller’s note at a steep discount, which was later converted into a block of Infogrid shares.

After the acquisition was closed, and during Infogrid’s Series B fundraising, K Street Capital claims that Cowell de Gruchy revealed to investors that Infogrid had generated just $15.1 million in revenue in 2022, a fraction of the $55.8 million of sales Infogrid claimed to have booked in an investor deck shared with Aquicore during takeover talks. K Street Capital also claims that Aquicore CEO, Adams, knew about Infogrid’s inflated valuations before the proposed acquisition but pushed for the deal regardless, in order to secure millions of dollars of personal bonuses.

Infogrid has yet to file a defense but said it would contest the case.

“After multiple rounds of Infogrid’s lies and then going back on their word, rather than its share of $43 million cash at closing, over a year later, Infogrid seeks to pay off AQ-1 with illiquid equity in Infogrid worth a fraction of AQ-1’s initial Aquicore Note,” the filing claims.

Infogrid Restructuring & Management Change

One year ago, Infogrid announced a $90 million Series B equity and debt round after a significant staff layoff we covered in January 2023: “This is the first major (disclosed) round of layoffs in the European smart buildings space, and can be seen as a warning of the dangers of accelerating too fast for the market,” our article explained.

Cowell de Gruchy then resigned as CEO of Infogrid at the end of 2023 and even stepped down as a director of the company in February 2024. Memoori now understands that the new CEO will be Kate Henningsen, who resigned from her role as Founder and COO of Arcadia two months ago and is listed as a director of Infogrid. Although this has not been officially announced yet.

The future growth trajectory of Infogrid was already uncertain, and this litigation is a further headache for their new management as they seek to refocus and draw a line under Cowell de Gruchy's tenure. The market for commercial building IoT platforms is extremely competitive. They will need to deploy any existing capital quickly and wisely to maintain customer confidence and keep investors onside for future funding rounds.