Wiz sued for $65 million: Was Raftt acquisition real or just a facade?
Lawsuit claims Wiz misrepresented a team transfer as a $50M acquisition, challenging its flagship Wiz Code patents.
A day before the European regulator is expected to give final approval for the sale of Israeli cybersecurity firm Wiz to Google for $32 billion, a 200 million-shekel (approximately $65 million) lawsuit has been filed against the company. While the sum is relatively small for Wiz, the suit raises serious questions about its alleged conduct.
At the heart of the case is Wiz’s reported acquisition of the startup Raftt in December 2023. The transaction was widely publicized in Israel and abroad, with Wiz executives giving interviews and media reports estimating the purchase price at $50 million. However, Raftt’s current owners now claim in the lawsuit that the deal was never a traditional acquisition. According to their filing, discussions at the time between Wiz representatives and Raftt’s founders indicated that the arrangement would only be presented publicly as an acquisition, while in reality it was a transfer of a group of employees to Wiz, a move aimed at preserving the struggling startup.
The lawsuit, filed in the Tel Aviv District Court by the law firms ERM and Pearl Cohen Zedek Latzer Baratz, alleges that Wiz provided a “civil bribe” of approximately $15 million to Raftt’s founders and employees and, along with the team, took the company’s technology. The claim further contends that patents later filed by Wiz relating to Raftt’s technology are therefore invalid.
The timing of the lawsuit, nearly two years after the alleged incident, raises additional questions. There are also questions regarding the conduct of seasoned investors, including Aleph and Carduman, who are said to have believed Raftt’s founders that the move was merely an acquihire. In standard acquihire arrangements, struggling startups transfer their teams to a larger company in exchange for symbolic compensation, essentially new employment contracts rather than a full acquisition.
After the original team left Wiz, Raftt continued operations with newly recruited staff and additional investors, further developing its prior technology. According to the lawsuit, the alleged irregularities came to light during a recent due diligence process, when patents registered by former Raftt employees were found to overlap with technology now central to Wiz’s flagship product, Wiz Code. Notably, the funds themselves are not named as parties in the lawsuit.
Wiz responded to the claims: "When a company is successful, unfortunately there are those who try to take advantage of it and file lawsuits using the 'success' as leverage. We are saddened that the founders of Raftt, young and talented entrepreneurs, are being harmed by this. As with every previous lawsuit against Wiz, we are confident this claim will ultimately be dismissed as without merit."
