Sequoia Capital India to Take Tough Action Against Frauds at Indian Startups

Photo by Moritz Mentges on Unsplash

The top investor, Sequoia Capital India, has recently detected that some portfolio founders have been under investigation for potential fraudulent practices or poor governance. Alarmed at the recent fraud allegations at some of its portfolio startups like BharatPe, Zilingo, and Trell, Sequoia said it will respond strongly when encountering “willful misconduct or fraud” and take strict action wherever needed.

The Wormholes

Ashneer Grover, Co-founder, and MD of BharatPe, along with his wife Madhuri Jain Grover, made the news for extensive misappropriation of company funds. The couple is no longer part of the fintech company, and an internal probe has been ordered against them.

“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,” Sequoia Capital said.

Next up, Zilingo’s founder and CEO, Ankiti Bose, was suspended over wrongdoing in accounting books. Shailendra Singh, Sequoia Capital India’s head, exited the board of the online fashion marketplace company.

Live-commerce startup – Trell – also probed claims that its founders siphoned off the money and lied about its usage and growth metrics.

Time to take tough calls

The VC reflects on what it could have done, along with other investors who have partnered with these companies to prevent such situations. Sequoia also commented that even later stage, investors can face negative surprises post-investment if there is willful fraud and intent.

To address this, Sequoia will undertake governance training for founders and senior management, implementation of whistleblower policies, and more independent board representation.

Too long? Here’s a one-liner: Sequoia Capital India to harden compliance amid frauds allegations at Indian startups; will provide governance training and implement whistleblower policies for founders and senior management.

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