Patrick Ryan, one of the earliest backers of Mu Sigma Inc, has dragged the India-born big data firm to court over 'downplaying' its prospects to buy back his stake, according to a Bloomberg report citing legal filings.
In a one of its kind high profile legal case, Ryan, founder and former chairman of professional services major AON Corp who now runs Ryan Speciality Group, has alleged that Mu Sigma founder Dhiraj Rajaram 'grossly misled' his investment firm Walworth Investments LLC about the prospects of the data analytics firm when it was doing well.
Ryan's private investment arm had reportedly put in $1.5 million in the firm in 2006 when Mu Sigma was still young and looking for capital. In 2010, Rajaram struck a deal to buy back the 17.5 per cent stake held by Ryan for $9.3 million.
According to the Bloomberg report, the complaint filed at a Chicago state court by the American businessman's investment unit alleged that this deal was reached after Rajaram allegedly put "deceitful" pressure on Ryan's son telling him that Mu Sigma was on the verge of losing its biggest clients.
It alleged that Rajaram underplayed the company's prospects when it was actually performing well to buy out a significant shareholder at an artificially low price.
Mu Sigma is now counted among a handful of India-born unicorns, or a startup that scaled the $1 billion valuation mark. Rajaram recently stepped down as the CEO, giving the position to his spouse Ambiga Dhiraj who is also a co-founder of the firm.
"We are aware of the filing and believe the allegations to be without merit. We intend to vigorously defend the case, but decline to comment any further," the Bloomberg report quoted a media statement issued by Mu Sigma.
Queries sent by Techcircle.in to both MuSigma and Walworth in this regard did not elicit any response at the time of filing this report.
The complaint also blamed Rajaram's devotion towards Hindu deity Lord Shiva as one of the reasons behind his action. According to Walworth's complaint, Lord Shiva's core philosophy called for "destroying or selectively abandoning the past".
"Only in hindsight did it become clear that Rajaram's true objective was to gain back the ownership that he had been forced to share, and that, far from tapering off, Mu Sigma was growing geometrically," the complaint alleged.
Mu Sigma was founded in 2004 by Rajaram, who was earlier a strategy consultant at Booz Allen Hamilton and PricewaterhouseCoopers. It helps companies institutionalise data-driven decision making and harness big data. The company solves high-impact business problems in marketing, risk and supply chain across 10 industry verticals. It claims to have about 3,500 decision science professionals and almost 140 Fortune 500 clients.
Mu Sigma has raised more than $160 million in multiple rounds of funding from marquee investors like General Atlantic, Sequoia Capital, Fidelity, FTV Capital and Accel Partners besides payment solutions giant MasterCard. In December 2011, Mu Sigma raised funding worth $108 million, led by private equity firm General Atlantic. Earlier, in April 2011, the company also raised $25 million, led by Sequoia Capital.