The unrest between the board, it's CEO and investors has spilled into the media this week.
Just three years ago, 27-year-old Ankiti Bose was being celebrated around the world as she became the first Indian woman to co-found a unicorn ($1 billion valuation) start-up in Singapore. Today, Bose’s company Zillingo, is one of Singapore’s most successful and highest-profile start-ups and boasts investors that include government-backed Temasek Holdings and one of the top venture firms in the world, Sequoia Capital India.
The now, 30-year-olds rise crashed down last month when potential investors began to question Zilingo’s finances. The questions were raised during due diligence as the company was seeking to secure new funding from Goldman Sachs Group.
The talks with Goldman Sachs ended, an accounting probe was launched, and CEO Bose, was suspended until May 5, 2022.
This week, the situation publicly heated up amid allegations that the board is discussing replacing Bose for good, prompting Bose to press the board to clarify her status saying that she is worried the company is growing directionless.
Bose has engaged legal representation and plans to fight against what she has described as a ‘witch hunt’ saying in a statement to Bloomberg that Sequoia and other investors are now using the pretext of accounting to oust her unfairly saying that some of the bookkeeping practices at Zilingo are technical decisions that are typically considered judgement calls at start-ups, practices that Bose also argues the company’s finance department is responsible for and other senior managers and directors were aware of.
Bose also argued that her and co-founder Dhruv Kapoor were young founders that leaned on the expertise of their investors and because of this Sequoia’s managing director, Shailendra Singh was intimately involved in Zilingo’s operations.
Singh has since resigned from the board of Zilingo and Sequoia has said in a statement that “The firm, along with other investors, was shocked and disappointed by allegations that surfaced in March 2022.”
Earlier this month, Sequoia posted the following statement on its website,
"We usually stand shoulder to shoulder with our founders during hard times. But on some rare occasions, we wake up feeling disappointed. 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. Recently some portfolio founders have been under investigation for potential fraudulent practices or poor governance. These allegations are deeply disturbing. We need some guardrails that we, as an ecosystem, sign up to, so that a few errant founders don't create big setbacks for the wider ecosystem at large."
Zilingo is the fourth of Sequoia’s high-profile portfolio companies to have an investigation into accounting practices or other corporate governance standards which has called into question their due diligence processes before backing start-ups.
BharatPe is being investigated by India’s Ministry of Corporate Affairs, Trell has launched an internal investigation over financial irregularities and Zertwerk was raided by the Income Tax Department on suspicion of tax evasion.
On Monday, Sequoia published a blog distancing themselves from the controversy surrounding four of their start-ups saying that these issues are not because of lack of due diligence. “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. It makes us reflect on what we could have done, along with other investors who have partnered in these companies, to prevent such situations.”
