BharatPe investor Sequoia Capital to take tough action against frauds at Indian startups

Sequoia Capital India has recently been alarmed by the fraud allegations at some of its portfolio startups like BharatPe, Zilingo, and Trell

startups like BharatPe, Zilingo, and Trell
startups like BharatPe, Zilingo, and Trell

Will respond strongly to frauds: Sequoia Capital India

The top investor firm Sequoia Capital India on Sunday said it will continue to respond strongly when it encounters “willful misconduct or fraud”, and take tough action wherever needed.

Sequoia Capital India is a venture capital firm that invests in consumers, technology, and healthcare. It has recently been alarmed by the fraud allegations at some of its portfolio startups like BharatPe, Zilingo, and Trell.

One of the biggest investors in the Indian and Southeast Asia startup ecosystem, it said that recently, some portfolio founders have been under investigation for potential fraudulent practices or poor governance.

“These allegations are deeply disturbing. We have always strongly encouraged founders to play the long game. We focus on the enduring and discourage focussing on vanity metrics. Despite that we find some counter-examples of what we espouse,” the VC said in a blog post.

BharatPe co-founder and Managing Director Ashneer Grover, along with his wife Madhuri Jain Grover, has been charged by the fintech platform of “extensive misappropriation of company funds” and using “company expense accounts” to “enrich themselves and fund their lavish lifestyles”.

The Grovers are no more a part of the fintech company which initiated an internal probe against them.

On the other hand, online fashion marketplace Zilingo has suspended its founder and CEO Ankiti Bose following a probe over wrongdoing in accounting books. Shailendra Singh, Sequoia Capital India’s head, has left the board of the Zilingo.

Live commerce startup Trell also probed claims that its founders siphoned off money.

Without naming the startups, Sequoia Capital India said that it “makes us reflect on what we could have done, along with other investors who have partnered in these companies, to prevent such situations”.

“It is easy to think of this issue as ascribed to poor due diligence. But let’s remember that when investments are made at the seed or early-stage there is hardly a business to diligence. Even later stage investors can face negative surprises, post-investment if there is willful fraud and intent,” the company noted. It said that the board is there to govern and help make decisions in the best interest of the shareholders.

“The board is not responsible to investigate on an ongoing basis unless something formally is brought up with them, which is often through a whistleblower,” said the top investor.

“Better corporate governance is a shared responsibility between founders, management and the board. And to get there the ecosystem needs to come together and commit to some changes.” Sequoia Capital India said it will continue to have zero tolerance for proven wrongdoing.

“We won’t hesitate to act to protect the interest of the company and employees, even if it costs us financially. We will take tough calls where needed in the interest of doing what is right,” the leading investor stressed.

“Our worst days are when we hear about breaches of integrity or ethics in the portfolio. This is the stuff that pains us deeply. And it’s time we speak about this,” it added.

[With Inputs from IANS]

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  1. Coincidence that Pakistan has been removed from FATF soon after Sequoia Capital makes its first investment in Pakistan in July 2022? Sequoia Capital in India should be thoroughly investigated – they r extremely dubious, opaque and inhuman. Most of the startups that they have invested in have allegations of fraud, public humiliation of the Founders, possible trapping and blackmail etc etc etc.

    If the money they invest in India is from proceeds of crime in Pakistan, UAE, China etc and then they exit the investments in India with a profit and take that money back to Pakistan/UAE/China via some opaque jurisdiction, we would never know – unless we track.

  2. Sequoia itself is a fraud. They have made first investment in Pakistan this year. They are into international money laundering.


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