Sequoia Capital India, one of the vital prolific and profitable buyers in India and Southeast Asia, addressed the fraudulent practices allegations levelled in opposition to a few of its portfolio startups and pledged to take proactive steps to do extra to drive elevated compliance.
In a weblog put up published Sunday afternoon, the storied enterprise fund mentioned it’s nonetheless a “work-in-progress” and mentioned that every one gamers collectively must “drive higher accountability, together with bettering efficiency, for us to unlock the complete potential this area has to supply.”
The put up — serving as Sequoia’s first official phrase on the matter — comes at a time when at the least three of its portfolio startups have undertaken investigations:
- Vogue market Zilingo has suspended Ankiti Bose, its founder and chief govt, this month following investigation over accounting. Sequoia Capital India’s head, Shailendra Singh, has left the board. (Each the developments had been first reported by Bloomberg Information.)
- BharatPe co-founder and former chief govt Ashneer Grover resigned from the startup, valued at $2.8 billion, earlier this yr after an investigation discovered that he and his spouse had siphoned off cash. (Grover has refuted the findings.)
- Reside commerce startup Trell not too long ago investigated claims that its founders siphoned off cash and lied about its utilization and development metrics.
Sequoia Capital India, which didn’t determine any startup by identify, mentioned it would work on a wide-range of issues, together with:
- Governance trainings for founders and senior administration
- Implementation of whistleblower insurance policies
- Extra unbiased board illustration
- Asking for extra disclosures and extra rigorous adoption of inner audits and controls
The put up, written by the Sequoia workforce, mentioned that it could typically seem that buyers don’t do sufficient due diligence, however reminded that when investments are made at seed or throughout a later time throughout the early stage, “there’s hardly a enterprise to diligence. Even later stage buyers can face unfavourable surprises, put up funding, if there’s willful fraud and intent.”
The put up provides:
As an investor consultant, one serves on the board, and boards can solely work with the knowledge shared with them – the much less transparency there’s to the board the lesser their capacity to actually unearth errant behaviors. The board is there to control and assist make choices in the most effective curiosity of the shareholders. The board shouldn’t be accountable to research on an ongoing foundation until one thing formally is introduced up with them, which is commonly by a whistleblower. Higher company governance is a shared duty between founders, administration and the board. And to get there the ecosystem wants to come back collectively and decide to some modifications.
At Sequoia India & SEA, we all the time have held ourselves to a excessive bar on integrity as a result of we’re on this for the long run. We are going to take a set of proactive steps as a accountable participant of this ecosystem and do greater than our fair proportion to drive elevated compliance throughout our portfolio firms together with, however not restricted to, governance trainings for founders and senior administration, implementation of whistleblower insurance policies, extra unbiased board illustration, asking for extra disclosures and extra rigorous adoption of inner audits and controls.
We are going to proceed to reply strongly after we encounter willful misconduct or fraud. When whistleblowers name us to report on points, we all the time take them critically. We all know in some circumstances they might transform baseless – however we nonetheless must look into them as it’s a board member’s fiduciary obligation. We are going to proceed to have zero tolerance in the direction of confirmed wrongdoing. We gained’t hesitate to behave to guard the curiosity of the corporate and workers, even when it prices us financially. We are going to take powerful calls the place wanted within the curiosity of doing what is true.
We hope extra folks within the ecosystem be a part of us on this pledge to larger governance. […]
