Sequoia-funded India startups hit by governance lapsesSequoia has bolstered governance practices, info sharingPR headaches in India stick to lawsuit, fund delaySequoia’s India woes share of shakeout after startup tell -execsMUMBAI, June 17 (Reuters) – Sequoia Capital’s India companions, caught out early this year by governance scandals at startup companies in its portfolio, assured investors at an April assembly in London that these “lowlights” were mostly uninteresting it, in step with three people accustomed to the discussions.
However two months later, Sequoia, a well-known enterprise capital player in India, is aloof grappling with complaints from startups about broken have faith and with a defamation lawsuit by a broken-down long-established counsel, whereas the closing of a $2.8 billion fund turned into once delayed because of a governance trouble.
Sequoia has acknowledged it faces governance-connected challenges in India. Two sources accustomed to the firm’s pondering talked about it had already made particular changes in governance practices, after an unusually frank blog post on April 17 by Sequoia that talked about it turned into once reflecting on most fresh incidents and would impose stricter tests and requirements on the startups it funds.
Register now for FREE unlimited access to Reuters.comGrumbling nevertheless persists, at the side of amongst many India startups no longer ensnared by scandals nevertheless concerned by them, highlighting the public members of the family headache for the firm as it shores up its predicament in the country.
The Silicon Valley company has invested $5.5 billion in India and, since 2017, has struck more than 400 offers, far surpassing U.S.-basically basically based opponents indulge in Accel and Lightspeed, info from Enterprise Intelligence reveals.
“As an entrepreneur you elevate money from Sequoia on yarn of of their recognition to work with founders closely,” talked about one CEO of a Sequoia-funded startup, who declined to be named to lead positive of negative relationships.
He turned into once amongst a dozen startups with funding and board illustration from Sequoia who talked about the firm had no longer saved them in the loop about governance-connected points that made headlines in India – and who scared that the incidents would possibly well presumably well well mirror upon them as properly. They declined to be identified.
Sequoia didn’t answer to Reuters queries for this text.
The first most well-known designate of governance concerns this year at Sequoia-funded startups emerged in January, when digital payments provider BharatPe launched a probe that at final ended in the sacking of several employees and findings of vendor malpractice. study more
Three months later, Singapore-basically basically based model startup Zilingo talked about it had suspended its 30-year-veteran CEO and cofounder Ankiti Bose, a broken-down Sequoia analyst, over suspected monetary irregularities. She turned into once later brushed apart in what Bose has talked about turned into once a wrongful termination. study more
The people accustomed to the April London assembly talked about Sequoia’s investors didn’t designate particular trouble or waning enhance for its work in India due to incidents, nevertheless it aloof faced further fallout later.
In Could possibly possibly, Sequoia wrote to a couple of its investors that it turned into once delaying $2.8 billion in fresh India and Southeast Asia funds over ongoing governance concerns at an Indian portfolio firm, in step with two sources and an e-mail viewed by Reuters.
The firm didn’t comment in the period in-between, even though it announced this week that the fund had successfully closed. study more
And this month, Sandeep Kapoor, Sequoia’s in-home long-established counsel in India for nearly 9 years till 2019, included the firm in a defamation lawsuit against media companies that reported on a leaked Sequoia e-mail of June 2.
Kapoor’s company, Algo Apt, talked about in a press commentary that the e-mail, sent to Sequoia’s portfolio companies, had made baseless references to “concerning crucial points” referring to the company and turned into once harming its pursuits.
The regulation company talked about in its court docket filing that Sequoia turned into once its high consumer in billings, nevertheless the U.S. enterprise capital company had terminated its engagement with it in January.
Kapoor declined to comment whereas the matter turned into once earlier than a think. Sequoia in the first court docket hearing of the case final week sought time to answer to the allegations. The case is subsequent predicament to be heard on June 18.
India’s startup sector had a blockbuster year in 2021 with $35 billion in fund raising, in step with Enterprise Intelligence, nevertheless the tell has since subsided and governance concerns are truly cropping up at a call of startups. study more
“It is heart-broken for Sequoia … nevertheless the sphere turned into once systemic,” talked about Anirudh Damani, managing accomplice at India’s Artha Enterprise Fund.
In keeping with the sources accustomed to Sequoia’s pondering, the firm believes it turned into once careful with due diligence at some stage in the startup tell nevertheless it is now further bolstering its efforts on startups’ governance coaching, whistleblower policies, audits and controls, as properly as communications with portfolio companies.
As share of stricter tests, Sequoia desires to assemble positive its properly-funded investee companies derive a “very stable CFO” and that startups complete monetary audits in time, talked about surely one of many sources.
One other source accustomed to the matter talked about Sequoia representatives had affirmed its dedication to investing in India and to company governance in a assembly earlier this month with India Finance Minister Nirmala Sitharaman.
The minister’s predicament of industrial tweeted a photograph of the assembly’s participants on the time, nevertheless didn’t answer to a matter for comment.
Register now for FREE unlimited access to Reuters.comReporting by M. Sriram in Mumbai and Aditya Kalra in Original Delhi; Enhancing by Mike Collett-White and Edmund Klamann
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