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Arjun Thyagarajan and Raghav Lal, the co-founders of fintech startup Solid, are pushing back on Series B investor FTV Capital, which filed a lawsuit against the company to get its $61 million investment back.

Solid offers companies a way to provide their own financial products, for example, banking, payments and cards. At the time private equity firm FTV invested in 2022, Solid was also offering cryptocurrency products.

FTV Capital’s suit, filed in the Delaware Court of Chancery and made public on October 2, claims, among other things, that Thyagarajan and Lal “lied to FTV concerning the company’s revenues, customer churn, and business generally and further deceived FTV.”

The private equity firm also claimed that both co-founders not only attempted to hide what they were doing, but also sent a cease and desist letter to their head of finance, who FTV said was sharing information with the firm. The firm also asked for Thyagarajan and Lal to resign.

FTV Capital did not respond to repeated efforts for comment.

Thyagarajan and Lal declined to resign and instead filed a countersuit on October 9 against FTV and its partner Robert Anderson. In it, they describe FTV as “an aggressive private equity firm,” and claim that “the moment its investment was no longer profitable, [the firm was] resorting to made-up claims of fraud, threats and strong-armed tactics to try to get its money back.”

In an interview with TechCrunch, Thyagarajan and Lal say they opened Solid’s books for FTV to perform due diligence, which the private equity firm did for about two months. They admit that FTV came back saying that Solid had softer revenue and higher churn than it originally thought. However, the firm used that to renegotiate the terms of the investment, to which the co-founders agreed.

According to Thyagarajan and Lal, the relationship began breaking down in November 2022 when the “crypto winter” was in full effect. With “a significant portion” of early-stage fintech as customers, Solid was impacted, Thyagarajan said.

“From November 2022 to about April or May 2023, it was not just a downturn in the market, but also a major drop in our revenue,” he said. “We knew that it’s a dip, but we’d come back strong and with a focus on mid-sized companies and enterprise companies where we saw a clear need for fintech infrastructure.”

At the time TechCrunch reported on Solid’s Series B in August 2022, Thyagarajan said the company grew 10x in revenue year over year. In addition, it had doubled its customers to 100 and became profitable. And year to date it had processed over $2 billion in transactions. That’s all changed.

Now over a year later, the amount of transactions processed increased — up to $5.79 billion year to date in 2023 — however, its revenue is down 70% from the same time last year, mainly due to churned customers, Thyagarajan confirmed.

Regarding the head of finance FTV claimed was providing information, Thyagarajan and Lal told TechCrunch that they let that person go for “incompetence.”

Thyagarajan and Lal say FTV’s claims are without merit because FTV’s own diligence report “shows that their allegations are completely baseless and incorrect.” They also insist “there’s been no wrongdoing,” on their part.

Still, there is a lot going on here, and much uncertainty ahead, so we’ll have to see how this plays out.