Rising irregularities at startups will cripple innovation space

Ankiti Bose looks beautiful, seems to be intelligent and smart. You have got it completely wrong if you presume that I am talking about a Hollywood or Bollywood heroine. Of course, you will think so if you Google for her photos. But she is neither a film actress nor a model of international repute. On the contrary, she happens to be a startup founder. Yes, you read it right, a startup founder.

Dehradun-born Ankiti Bose founded Zilingo, an ecommerce fashion startup, along with Druv Kapoor in 2015, when she was just 23.

Prior to that, she worked as an investment analyst at Sequoia Capital at its Bengaluru office. For the uninitiated, Sequoia Capital is a 51-year-old American venture capital major, which has backed startup world's leading lights like Apple and Google, and many more in their early stages of evolution. She worked under Shailendra Singh, who transformed Sequoia Capital India, as its head, into South East Asia's biggest venture capital firm with many unicorns under its belt. Sequoia supported Bose's Zilingo, which is focused on empowering and tapping small businesses across South East Asia and beyond, from its early stages. She shifted her base to Singapore in 2016 and over the years, raised more than $300 million (nearly Rs 2,500 crore at current exchange rates) with the last round of fund-raising pegged at $226 million at a valuation of $970 million early 2019.

Apart from Sequoia, other marquee investors like Temasek Holdings Pte put funds in the startup. She was obviously a rising tech star CEO. Forbes Asia featured her in its 30 Under-30 list in 2018. She subsequently found a place in Fortune’s 40 under- 40 and Bloomberg 50 lists.

However, things turned topsy-turvy at Zilingo as the startup’s management allegedly splurged on marketing and went on an expansion spree that turned unwieldy, according to media reports. She had to pay a heavy price as she was sacked as Zilingo CEO in the middle of 2022 following a whistleblower's complaint about some financial irregularities in the startup. Zilingo is on the verge of liquidation now, taking all the investments into thin air.

Ankiti Bose is not the lone startup founder to face such allegations. Several other Indian entrepreneurs also had to move away from the startups they founded with passion amid similar circumstances. Notable among them is Ashneer Grover, co-founder of unicorn BharatPe, who resigned as its Managing Director last year. His wife Madhuri Jain, who was the company’s Head of Controls, was also sacked following an internal investigation. The list is only growing.

These days, Byju's, India’s biggest startup by valuation, is in headlines for all the wrong reasons. Sudden searches by Enforcement Directorate (ED) at the offices and residence of Raveendran Byju, co-founder and CEO of Byju’s, came as a big shock for many. It is said that ED carried out searches with regard to violations of Foreign Exchange Management Act (FEMA) by the edtech major. The amount involved is a whopping Rs 9,754 crore. However, Byju’s CEO stoutly denied the allegations. We have to see what will happen in this case.

Globally, startups are facing a big fund crunch as investment inflows have largely dried up. This is more so in India.

As per statistics available in the public domain, venture capital investments in India fell by 38 per cent to $20.9 billion in 2022 from $33.8 billion in 2021. This funding winter will for sure separate wheat from the chaff. So, it's time to brace up for more skeletons tumbling out of the Indian startup cupboard.

However, we know no sector, no segment and for that matter no section of society is devoid of such happenings. But the number of people facing allegations is growing by the day in the Indian startup world. That doesn't augur well for the growing startup ecosystem in the country.

I remember a senior consultant, who recently donned the role of a strategic advisor to startups, wondering why startup founders buy Mercedes or other luxury cars so early in their entrepreneurial pursuits.

"I know a businessperson should be free of tensions and should have a smooth lifestyle. But buying a Mercedes with investors' money is not a good idea. It should never be the priority," he told me in a matter-of-fact tone that was laced with erudition.

As a cliché goes, there are no free lunches in this world. This applies to startups as well. There are no free investments. And there is no free income either. Everything should be earned in the truest sense of the term. A good product or good idea should be packaged in such a way that it should be able to attract customers, earn earnings and eventually earn profits on its own. Such ideas or products will definitely be successful. There are no shortcuts. Towards this, honesty and modesty should be the priorities for startup founders if they want their ventures to last long. Of course, this applies to others as well. Hope the Indian startup founders keep this in mind while going about their avowed business pursuits.