Instacart Founder Apoorva Mehta Sued for Creating “Copycat” Healthcare Startup

Apoorva Mehta, Instacart co-founder and Indian-Canadian businessman, recently founded healthcare startup Cloud Health Systems. He is now being accused of using stolen trade secrets to do so, with a lawsuit claiming the company is a copy of an existing company that also runs a website promoting weight loss.

The lawsuit originates from Hello Logistics Inc., a company operating under the name NextMed. The lawsuit names Apoorva Mehta, his business partner Tejasvi Singh, and Cloud Health Systems under allegations of using trade secrets and copyright infringement, among other claims.

How did he get the trade secrets? The lawsuit states that Mehta came into contact with NextMed’s trade secrets during the process of gathering information for “due diligence for investors.” However, the claims believe it was a guise seeing as Mehta and Singh turned around and used the gathered information to create their own company.

• The lawsuit states that the two business partners’ first healthcare venture, Sunrise, has a “copycat website.”
• There is also an allegation that claims Cloud Health Services has implemented confidential strategies belonging to NextMed, including customer acquisition, in a matter of weeks.

There is plenty of funding behind Cloud Health Systems. Even with the allegations in the air, the startup has managed to attract $30 million in funding. While a lot of the faith might originate from Mehta’s past success, the company has received a hefty valuation of $200 million during the funding round.

• The valuation is considered very high when you take into account the fact that the company was founded this year and did not have any services launched.
• The funding and valuation are also surprising due to the state of the funding market.
• Thrive Capital led the round, but it also saw participation from Greenoaks Capital.
• The launch occurred a month after Instacart announced Instacart Health, an initiative to get healthier ingredients to people.

Mehta already has big plans for Cloud Health Systems. While the initial pursuit will be Sunrise, he already spoke about his desire to “own multiple consumer brands for different medical conditions.” Ultimately, he wants to tackle multiple conditions while offering medical consultations and related services.

Mehta tweeted about his ambitions after announcing his decision to step down from the board once Instacart goes public. “Since I transitioned from CEO to Executive Chairman a year ago, I realised that I want to pursue a new mission and I want to do it with the same singular focus that I had while building Instacart. Stepping off the board will allow me to do just that.”