A neobank called Greenwood, co-founded by Paul Judge of Fintech, acquired The Gathering Spot last year – a network and co-working club targeting Black and Latinx customers – in what was described as a “Black on Black” deal, with Judge stating that it was about “two companies” empowering each other.
However, a little over a year later, all that hope and goodwill has vanished.
Ryan Wilson, the CEO and co-founder of The Gathering Spot, filed a lawsuit against Judge, Greenwood co-founder Ryan Glover, and the fintech itself, claiming that Greenwood and its founders failed to deliver on promised payouts to Wilson and former TGS shareholders. The lawsuit alleges that Greenwood refused to pay bonuses to TGS employees and more. Wilson claims that he and other TGS shareholders are owed a $5 million payout and other matters.
In response, Greenwood denied the allegations and claimed in a countersuit that TGS founders misrepresented their financial condition, leading to over $27 million in unforeseen liabilities.
Wilson declined to comment, and Glover and Judge did not respond to requests for comment.
In addition, it was reported that Greenwood announced over the weekend that T’Keel “TK” Petersen, a co-founder of TGS, had left the company and his role as TGS COO. Shortly after, Greenwood announced the hiring of Mike McCloskey as their CFO. TGS later clarified in an Instagram post that Petersen’s departure was unrelated to McCloskey’s hiring.
The turn of events has not been well-received by the community of Black professionals who are part of the TGS network.
What went wrong?
Initially, both TGS and Greenwood seemed to share not only a similar demographic focus but also a shared set of values. Greenwood was founded as a banking platform for Black and Latinx communities shortly after the killing of George Floyd. The Gathering Spot was established in 2016 as a networking and co-working hub for underserved backgrounds.
Both companies claimed to help minorities achieve generational wealth and financial freedom through entrepreneurship and networking. According to one of Wilson’s complaints, Greenwood’s acquisition of TGS created the largest fintech and community platform for minorities in the country. The acquisition of TGS by Greenwood, reportedly for $50 million in cash and stock last year, seemed like a boon.
However, that dream has now turned into a sad reality.
The first cracks in the relationship surfaced at the end of February when Wilson filed a complaint alleging that Greenwood had “deliberately abused the purchase agreement,” thereby breaching their contract.
In June, Greenwood filed a countersuit claiming that Wilson, Petersen, and TGS shareholders had misinterpreted the contract agreement, disregarding their own “bad conduct” that allegedly continued the violations they now complain about.
In July, Wilson filed another complaint alleging that Greenwood had failed to pay a $5 million payout to TGS shareholders contingent on meeting a revenue threshold and rejected any bonuses for 2022. The complaint alleges that Judge and Glover used Greenwood funds to pay themselves “excessive bonuses” and make other “preferential transfers.”
Wilson also claims that Greenwood missed several deadlines for payments owed to TGS shareholders, including Valor Ventures, Cameron J. Newton Enterprise, and JAAD Capital. According to the complaint, Wilson believes that Greenwood’s payment failures stem from financial troubles and predicts that the company will soon be insolvent.
According to PitchBook, Greenwood has raised approximately $90 million in funding with a recent valuation of $325 million. Before Greenwood, Judge had a long career as a technologist, co-founder, and investor, and such a track record could be music to investors’ ears.
Greenwood’s supporters include significant players in venture capital and financial services. This includes Bank of America, Citigroup, Fidelity, JP Morgan Chase, Mastercard, Visa, and Wells Fargo. Among its financial investors are Black Operator Ventures, Lightspeed, SoftBank’s Opportunity Fund (where Judge currently serves as chairman), and many more.
Meanwhile, The Gathering Spot boasts over 12,000 members in Los Angeles and Atlanta. Wilson and Petersen were honored with the city’s highest recognition, the Phoenix Award, for their work at TGS.
The lawsuit has caused concerns within the Black technology ecosystem about the future of the community.
Zane Capital founder Shila Nieves Burney said her heart dropped when she heard about Petersen’s departure. She told TechCrunch+, “I’m a fanatic follower of what TK and Ryan have built, and when I was building Zane, The Gathering Spot was my primary meeting place. My hope is that this community will not be lost through the acquisition. We’re already struggling with TK’s loss.
Kaisean Raines, an entrepreneur who is also a TGS member, said that the situation has evoked a range of “emotions” for himself and others in the community.
“We were shocked and disappointed because it highlights the gaps in communication and transparency. It clearly reminds us how important these aspects are to maintain trust and harmony within a community,” he said. On the other hand, it has also sparked constructive conversations about the need for improvement and growth. We’re using it as a learning experience and hoping that it ultimately leads to a stronger, more resilient community.”