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Monday, May 29, 2023

Surf Air Co-Founder Takes Investors to Court for Dilution

Surf Air co-founder David Eyerly is taking his former company and investors to court for allegedly diluting his stock in the company.

In a complaint filed in Los Angeles Superior Court, Eyerly alleges he “was the victim of a complex and malicious scheme” to dilute his shares from 12.5 percent of the company to 0.75 percent. He is seeking in excess of $125 million as well as punitive damages.

Surf Air is an all-you-can fly subscription service airline that costs $1,750 a month and operates throughout California. The service is popular among tech investors and entrepreneurs, who regularly fly between Los Angeles and San Francisco.

The airline was co-founded in 2011 by brothers David and Wade Eyerly. David Eyerly served as chief operating officer from 2011 to 2013. Wade Eyerly served as chief executive from 2012 to 2014. The company has raised $84 million in investments.

Investors Anthem Venture Partners, Velos Partners and Base Ventures, who lent Surf Air $65 million last year to buy additional airplanes, are named as defendants in the lawsuit.

“Dave doesn’t know exactly how these private equity companies pulled it all off,” said Eyerly’s lawyer, Skip Miller of Miller Barondess, who added his client wasn’t notified of his dilution. “It was done in the dark.”

David Eyerly was asked to leave Surf Air in 2013 by his brother at the behest of the board, said Miller. Wade Eyerly left Surf Air last year and soon after founded all-you-can-fly subscription airline Beacon of New York, which operates in the Northeast.

In response to the lawsuit, Surf Air issued a statement.

“Surf Air will always defend itself against meritless litigation and is confident this case will ultimately be dismissed,” said a spokesman for Surf Air

The lawsuit claims Surf Air is worth over $1 billion.

Technology reporter Garrett Reim can be reached at greim@labusinessjournal.com. Follow him on Twitter @garrettreim for the latest in L.A. tech news.

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