Hercules Capital Faces Securities Class Action After Short Seller Allegations

Lawsuit alleges Hercules copied Google Ventures' deal sourcing and misrepresented portfolio valuations

Apr. 2, 2026 at 11:19pm by Ben Kaplan

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A high-contrast, cinematic close-up of complex financial machinery and equipment, representing the technical and institutional nature of Hercules Capital's business operations.An extreme close-up of Hercules Capital's financial infrastructure highlights concerns over the company's investment practices and portfolio valuations.San Francisco Today

Hercules Capital, a business development company, is facing a securities class action lawsuit following a critical report from short seller Hunterbrook Media. The lawsuit alleges that Hercules overstated the due diligence of its deal sourcing and loan origination process, and misrepresented its portfolio valuations and net asset value.

Why it matters

The allegations, if true, would raise concerns about Hercules' business practices and the accuracy of its financial reporting, which could impact investor confidence and the company's standing in the market.

The details

The lawsuit claims Hercules' deal sourcing process merely copied deals published on Google Ventures' website, contrary to the company's assurances about its robust origination process. It also alleges Hercules overstated the due diligence of its portfolio valuation process and misclassified some investments. The lawsuit was prompted by Hunterbrook's report, which cited a former Hercules analyst who claimed the company's deal sourcing was essentially copying Google Ventures.

  • The lawsuit covers the period from May 1, 2025 to February 27, 2026.
  • Hunterbrook published its critical report on February 27, 2026, driving Hercules' stock price down nearly 8%.

The players

Hercules Capital, Inc.

A business development company that provides financing solutions to high-growth venture capital-backed and institutional-backed companies in technology and life sciences industries.

Hunterbrook Media

A short seller that published a critical report on Hercules Capital, titled 'The Myth of Hercules Capital.'

Hagens Berman

A national shareholders rights firm investigating claims that Hercules violated federal securities laws.

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What they’re saying

“We're investigating Hunterbrook's allegations and, if true, whether Hercules misled investors about its sourcing, underwriting, marks, PIKs, and, ultimately its NAV.”

— Reed Kathrein, Partner, Hagens Berman

What’s next

The judge will decide whether to allow the securities class action lawsuit to proceed against Hercules Capital.

The takeaway

The allegations against Hercules Capital, if proven true, could undermine investor confidence in the company's business practices and financial reporting, potentially leading to further legal and regulatory scrutiny.