creative ways to deal with an investor,who breached a non-compete agrmnt

Hi everyone,

We are a hardware startup from the EU, and we are seeking advice. Long story short: our warm intro investor has started development of a competing product.

Warm intro was made by our ex-client - who is an investor's business partner. Additionally, the investor is involved in an offline business, which we have offered to improve with our solution. We prepared a demo (ex-client was attending it) and the investor expressed interest in further collaboration.

Initially, we refrained from sharing any internal details. However, the investor subsequently reached out to us via email, stating that he has no intention of making a similar product and requested more information. Given the warm introduction, the investor's strong business background, and a written assurance of confidentiality, we've relaxed and began sharing technical and internal details regarding our ongoing development process. The ex-client was involved by the investor in a majority of discussions, emails and demos.

Eventually, the investor proposed giving our ex-client, who is also the investor's business partner, a 50% stake in our venture. We declined this offer for several reasons: due to a lack of trust in the ex-client's business integrity, the perceived value of a 50% stake was unclear, and we already had a fully established MVP and team in place. Subsequently, we chose to proceed with our venture without involving these individuals. Unexpectedly, we received information about a competitive product being developed by the ex-client and the investor, based on information we had shared. Notably, both individuals had no prior knowledge or interest in our field of work. Most of our communication with them was conducted in written form.

Despite our efforts, these individuals have been consistently unresponsive to our emails, among other forms of communication. Our research has revealed that the ex-client had previously been involved in fraudulent activities. Given this revelation, we believe there is no need to be too nicely, so any (but legal) advice is welcome.

Thanks and let's together protect our startup comminity from bad actors.