Former Oura CEO sues company for allegedly withholding 5% equity

Former Oura Health CEO Harpreet Singh Rai has sued the smart ring maker in a California federal court, alleging wrongful termination and breach of contract. Rai says the company removed him to avoid granting him equity worth millions of dollars.

Rai’s lawsuit comes at a time when Oura is already grappling with multiple legal battles worldwide. The company is currently embroiled in disputes with Ultrahuman in both the United States and India, and was also sued by its former promoters and early investors in July this year.

According to the complaint, Rai was promised a 5% ownership stake if he raised €10 million which is about $11.55 million. He says he crossed the target but was fired without cause before receiving the full set of stock options.

Rai became involved with Oura after first using the product as a customer. The company began in 2015 through a Kickstarter campaign. In 2016, Rai met founder Kari Kivela at a Whole Foods store in New York. After the meeting, he invested $1 million in Oura’s Series A round and brought in other investors including future board member David Shuman.

Rai joined Oura as president in 2017 as an independent contractor with an annual pay of $100K and around 5% equity. He became CEO in 2018 and led the company through major fundraises including a $5 million round in 2018 and a $28 million Series B round in 2019. 

According to Rai, his employment agreement required the company to restore his equity to 5% after the Series B with vesting over 42 months. He claims the board assured him the grant would be approved.

The lawsuit states that in 2021, as his initial options were close to full vesting, board chair Eurie Kim proposed reducing his stake to 3% with any future increase linked to valuations of $5 billion and $10 billion. A few weeks after Oura launched its third generation ring in October 2021, Rai says he was removed from the company despite never resigning.

Rai is also seeking equity compensation worth millions of dollars along with $225 thousand in severance. His attorney Eric Rosen from Dynamis LLP said Rai played a crucial role in Oura’s growth.

Rai recently joined Mumbai-based health and insurance startup Loop as President of Healthcare vertical.

In May, Oura said Ultrahuman copied its smart ring design and patents, which led to a US order blocking Ultrahuman rings from entering the country. Ultrahuman has filed its own case in Delhi, saying Oura copied its sensor technology and health features.

Meanwhile, multiple high-profile promoters of Oura, including Drew Brees, Peter Attia and marketer Gordy Bal, allege that the firm promised them stock options in exchange for investment, advisory work or promotional services, but later refused to honor those agreements. They claim Oura’s CEO approved these deals, only for the company to later assert that its board never authorized the option grants, rendering them invalid. As a result, the disputes have escalated into overlapping lawsuits and arbitration cases.