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<keyword id="4990697" type="General" weightage="20" keywordseo="Burda-Principal-Investments" source="Orion">Burda Principal Investments</keyword>, one of the leading investors in Singapore-based fashion startup <keyword id="3131383" type="General" weightage="20" keywordseo="Zilingo" source="Orion">Zilingo</keyword>, has backed the action against its founder and CEO <keyword id="1341941" type="General" weightage="20" keywordseo="Ankiti-Bose" source="Orion">Ankiti Bose</keyword>, hinting that legal action against the ousted founder may be on the anvil. Burda Principal Investments (BPI), a division of Europe-based Hubert Media Group, said in a statement that "signficiant irregularities in reporting to investors" led to Zilingo's failure. "Kroll Inc was jointly hired by the main investors to examine this case and the investigations on financial irregularities have been completed," said the investment firm. Hinting at impending legal action, Burda added: "As the investors are still considering options for legal action, please consider we cannot comment on any details from the report or share any further information at the moment." The statement came in the wake of a report by leading startup coverage portal Inc42 last week, revealing fresh explosive revelations around the financial wrongdoings undertaken by Bose including $10 million (Rs 80 crore) dubious and unexplained payments, submitting conflicting revenue figures to shareholders and a 10x increase in her salary without Board approval. Bose has also filed a $100 million defamation suit in Bombay High Court against prominent investor and co-founder of Seedfind, Mahesh Murthy, for an article he wrote in a leading business magazine. Bose was quoted as saying that the $100 million lawsuit was filed taking into account her balance of equity in Zilingo and "the losses that statements like this can affect future endeavours." The lawsuit is currently in the pre-admission stage, according to reports. Earlier, Singapore's state-owned investment fund Temasek had backed the action against the founder, saying "We expect our portfolio companies to abide by the sound corporate governance and codes of conduct and ethics. We are, therefore, in support of the board's investigation into the complaint as a part of good governance to safeguard the interests of the company." During the period of investigation, the Board of Zilingo had issued a statement stating, "Contrary to claims that have been circulating in the media, this decision (suspension) was taken jointly by the Board and the relevant shareholders pursuant to pre-agreed shareholder voting rights, and does not reflect the decision of a single shareholder." In March last year, Zilingo suspended 30-year-old CEO Bose over complaints about alleged financial irregularities. Following an investigation led by an independent forensics firm, the startup had decided to terminate Bose's employment. SEE ALSO: <a href="https://www.businessinsider.in/entertainment/news/filmfare-awards-2023-gangubai-kathiawadi-makes-a-clean-sweep/slidelist/99833037.cms">Filmfare Awards 2023: Gangubai Kathiawadi makes a clean sweep</a> <a href="https://www.businessinsider.in/careers/news/these-qualifications-will-help-you-snag-the-best-tech-jobs/slidelist/99838842.cms">These qualifications will help you snag the best paying tech jobs in BFSI sector</a> <a href="https://www.businessinsider.in/tech/mobile/news/indian-smartphone-shipments-decline-by-19-in-q1-2023-5g-smartphones-share-increases/articleshow/99815120.cms">Three out of five smartphones sold above ₹45,000 in India were iPhones between Jan-March: Counterpoint</a>

Significant irregularities in reporting to investors led to Zilingo's failure: Investor Burda

<ul class="summary-list"><li>VC firm <keyword id="13647765" type="UNKNOWN" weightage="60" keywordseo="sequoia-capital-india" source="Orion">Sequoia Capital India</keyword> has spoken out about fraud allegations at multiple <keyword id="6362513" type="UNKNOWN" weightage="60" keywordseo="startups" source="Orion">startups</keyword> it's backed.</li><li>The firm said it was difficult to conduct due diligence on early-stage businesses.</li></ul><keyword id="11904329" type="UNKNOWN" weightage="60" keywordseo="sequoia-capital" source="Orion">Sequoia Capital</keyword> India, a major investor in Southeast Asian startups, has said due diligence on early-stage startups is tough as four of its portfolio companies face fraud or misconduct allegations.<a href="https://india.sequoiacap.com/build/corporate-governance-the-cornerstone-of-an-enduring-company/">In a blogpost not attributed to a particular author</a>, the firm said: "Recently some portfolio founders have been under investigation for potential fraudulent practices or poor governance. These allegations are deeply disturbing."The post added: "It is easy to think of this issue as ascribed to poor due diligence. But let's remember that when investments are made at 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."<keyword id="12116150" type="UNKNOWN" weightage="60" keywordseo="sequoia" source="Orion">Sequoia</keyword> didn't name check any firms, but one of these negative surprises has been <a href="https://www.businessinsider.com/zilingo-ceo-suspended-accounting-probe-singapore-startup-report-2022-4">Zilingo</a>, a Singapore-based fashion e-commerce startup first backed by Sequoia in 2015 and estimated to be worth $970 million. <keyword id="13616941" type="UNKNOWN" weightage="60" keywordseo="zilingo" source="Orion">Zilingo</keyword> earlier this month suspended its cofounder and CEO Ankiti Bose amid a financial probe into its accounting practices. A lawyer acting for Bose called her suspension "unfair" in <a href="https://www.bloomberg.com/news/articles/2022-04-14/sequoia-s-singh-leaves-zilingo-board-amid-accounting-probe">a statement to Bloomberg</a>.Sequoia and another backer, Temasek, raised their concerns with Zilingo's board. Sequoia's Shailendra Singh subsequently resigned as director of Zilingo's board, Bloomberg reported.Three other Sequoia-backed startups are also under scrutiny.In mid-March, Indian news media reported that EY India was investigating social e-commerce platform <a href="https://inc42.com/buzz/trells-founders-under-scrutiny-for-financial-irregularities/">Trell</a> for alleged financial irregularities. The same month, <a href="https://economictimes.indiatimes.com/tech/startups/tax-officials-raid-zetwerks-offices-founders-homes-suspecting-tax-evasion/articleshow/90293975.cms?from=mdr">Zetwerk Manufacturing</a> was reportedly raided by Indian tax officials over alleged tax evasion concerns. Also in March, financial platform <a href="https://www.businessinsider.in/business/startups/news/ashneer-grover-loses-singapore-arbitration-bharatpe-probe-to-continue/articleshow/89887218.cms">BharatPe's</a> cofounder Ashneer Grover was <a href="https://techcrunch.com/2022/03/01/bharatpe-founder-ashneer-grover-siphoned-off-money-fintech-startup-says/">accused of misappropriating funds</a> by the firm and quit as CEO. Sequoia in its post called for better "guardrails" for the startup ecosystem, such as agreeing new rules around corporate governance, and said startup "boards can only work with the information shared with them" to uncover wrongdoing.Sequoia's post highlights the risks of investing in early-stage startups, where <keyword id="11897927" type="UNKNOWN" weightage="60" keywordseo="venture-capital" source="Orion">venture capital</keyword> firms plow cash into unproven companies, often trusting in a founder's vision more than the solidity of their business model. The firm wrote that a startup's board "is not responsible to investigate on an ongoing basis" for potential bad behavior unless it's explicitly flagged up.But some regional investors shot back at suggestions that the wider ecosystem was at fault."Sequoia India, caught with their pants down with 4 portfolio companies. Decides to blames the 'eco-system,'" wrote Sam Gibb, managing partner of Singapore-based fintech investor Resolution Ventures, <a href="https://twitter.com/samngibb/status/1515837214499827714">on Twitter</a>. He said that bigger investors encourage a "growth-at-all-costs" mentality at startups, leading founders to step "over gray lines" to hit metrics."The interests of career VCs (where a bulk of remuneration is fixed) diverge from founders as status is more important to them than building lasting economic value," he wrote.Sequoia could not be reached over the phone for further comment.

Big-name investor Sequoia says startup due diligence is hard as 4 of its Asian portfolio companies face allegations of fraud or misconduct

<keyword id="2988161" type="General" weightage="20" keywordseo="ashneer-grover" source="Orion">Ashneer Grover</keyword>, co-founder and former Managing Director of fintech platform <keyword id="7349800" type="General" weightage="20" keywordseo="bharatpe" source="Orion">BharatPe</keyword>, said that he is planning to start his own venture without seeking funds from the investors. Grover, who along with his wife Madhuri Jain Grover has been stripped of all company titles over alleged "extensive misappropriation of company funds" and using "company expense accounts" to "enrich themselves and fund their lavish lifestyles", said he will not go back to investors again. "I wish to start my own venture with my own money and make it profitable," he said during the recently-held TiECon-2022 start-up and entrepreneurial event in Chandigarh, according to media reports. "I don't want to go to the investors again," Grover told a panelist, adding that his tussle with BharatPe is a "badly fought corporate battle". Ashneer last month threatened a legal action against <keyword id="13101093" type="General" weightage="20" keywordseo="bharatpe-ceo" source="Orion">BharatPe CEO</keyword> Suhail Sameer and the board for his comments on professional networking platform LinkedIn against his sister Ashima Grover, along with seeking a resignation from Chairman Rajnish Kumar. In a letter written to BharatPe Board, Ashneer said that Sameer should be "immediately served a show-cause notice for his despicable public behaviour and immediately put on leave of absence to manage the damage to the Brand of the company". The letter was marked to company investors, along with Chairman Kumar, CEO Sameer and co-founder Shahshvat Nakrani. The Ashneer-BharatPe saga, along with some more such incidents (the latest is Singapore-based fashion-tech startup Zilingo) has brought corporate governance in the Indian startup ecosystem to the fore. Alarmed at the recent fraud allegations at some of its portfolio startups, Sequoia Capital India has said it will continue to respond strongly when it encounters "willful misconduct or fraud", and take tough action wherever needed. Sequoia Capital India has said it will continue to have zero tolerance towards proven wrongdoing. SEE ALSO <a href="https://www.businessinsider.in/business/startups/news/its-open-india-now-has-a-century-of-unicorns/articleshow/91254798.cms" data-type="tilCustomLink">It's Open — India now has a century of unicorns</a> <a href="https://www.businessinsider.in/business/news/upi-reached-new-heights-with-5-58-billion-transactions-in-april-2022/articleshow/91250099.cms" data-type="tilCustomLink">UPI reaches new heights with 5.58 billion transactions in April 2022</a> <a href="https://www.businessinsider.in/business/startups/news/byjus-swiggy-and-ten-other-startups-raised-the-biggest-round-last-quarter/slidelist/91251672.cms" data-type="tilCustomLink">Byju's, Swiggy and ten other startups raised nearly $4 billion last quarter</a>

After being ousted from BharatPe, Ashneer Grover plans to start another business without any investors

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Significant irregularities in reporting to investors led to Zilingo's failure: Investor Burda

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Big-name investor Sequoia says startup due diligence is hard as 4 of its Asian portfolio companies face allegations of fraud or misconduct

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After being ousted from BharatPe, Ashneer Grover plans to start another business without any investors

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