Will respond strongly to frauds: Sequoia on BharatPe fiasco

Breaking its silence over controversy at fintech firm BharatPe, Sequoia Capital India on Sunday said it has zero tolerance towards proven wrongdoing and will continue to respond strongly to wilful misconduct or fraud so that a few errant founders do not create big setbacks for startup ecosystem.
Will respond strongly to frauds: Sequoia on BharatPe fiasco

NEW DELHI: Sequoia, which is the largest shareholder in BharatPe where co-founder Ashneer Grover was virtually sacked from his role, in a blog on its website said it won’t hesitate to act to protect the interest of shareholders and employees even if it costs it financially.

“We will take tough calls where needed in the interest of doing what is right,” it said without directly mentioning BharatPe.

Sequoia, which holds 19.6 per cent of BharatPe, did not say if it had insisted on removal of Grover after a third party audit alleged grave governance lapses under him.

BharatPe, which allows shop owners to make digital payments through QR codes, first sacked Madhuri Jain, wife of Grover, for alleged misappropriation of company funds. This was followed by Grover resigning and the company stripping him of the co-founder and other titles over alleged “extensive misappropriation of company funds” by “creating fake vendors” to siphon money and using “company expense accounts” to “enrich themselves and fund their lavish lifestyles.”

Grover has denied any wrongdoing.

The India unit of the American venture capital firm said it wants companies that are not just valuable but also enduring.

“Recently some portfolio founders have been under investigation for potential fraudulent practices or poor governance. These allegations are deeply disturbing,” it said. “We have always strongly encouraged founders to play the long game. We focus on the enduring, and discourage focussing on vanity metrics.”

Startup ecosystem needs guardrails so that a few errant founders don’t create big setbacks, it added.

Sequoia, which has invested in companies ranging from 1mg to Byju’s to Cafe Coffee Day and Grofers, said eight companies from its portfolio went public last year.

“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,” it said.

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