Singh is feeling the heat as he evolves from start-up cheerleader to champion of corporate governance. Increased scrutiny prompted some Sequoia-backed Indian founders to compare him to a forceful ruler from Indian history.
“There is art to setting up governance — the board, process and advisers — in such a way that brakes kick in automatically when something bad happens,” said Dmitry Levit, founder of Singapore-based VC firm Cento Ventures.
He said many of Sequoia India’s companies are like racing cars. “If somebody tries to run a Formula One car on off-road terrain in stormy weather, it can’t absorb the shocks.”
Sequoia India said it has always cared about corporate governance.
“Building world-class companies requires first-rate governance,” a Sequoia India spokesperson said in a statement to Bloomberg.
“There is always more we can do to work with founders so that their companies benefit from better, more robust standards of governance, such as stronger audit oversight, clear whistle-blower processes and the need to bring independent directors on board earlier.”
SALARY QUESTIONS
The zeal for governance may have come too late for Zilingo. About a week after Bose was suspended, a board director and an adviser to another shareholder questioned her about why she was drawing a monthly salary of S$50,000.
Her employment contract five years ago stated it as S$8,500 and the adviser had just discovered she’d been making considerably more since 2019, according to people with knowledge of the matter. Bose said the numbers are inaccurate but did not provide her salary information.
Investigators hired by the board also questioned her about three sets of revenue numbers for FY21 that Zilingo had shared with external parties: US$190 million, US$164 million and US$140 million.
Bose explained to them that the US$190 million had been circulated before the year closed and before the cancellation of masks and other orders. The US$140 million was used in a due diligence report for fundraising, while the US$164 million included uninvoiced revenue, according to a document seen by Bloomberg.
But another document the company shared with a potential investor, seen by Bloomberg News, shows Zilingo’s net revenue for the year was about US$40 million. A representative for Kroll, the firm that conducted the probe, declined to comment.
Bose said in an interview with Bloomberg News in May that Zilingo has used aggressive methods for recognizing revenue, but that the calculations are standard practice for the industry and that all of its investors were fully aware of them.
“These matters are well understood by all investors,” Bose said in the interview.
Zilingo “went through a tough time during COVID,” said Rohit Sipahimalani, Temasek’s chief investment officer.
“There were clearly some things the board was unaware of, and when there were complaints made, they investigated into it and actions have been taken subsequently.”
Now, the company is in turmoil and some employees say they are worried about their future.
The board in June was considering liquidating the company. After her suspension in March, Bose herself filed a formal complaint to the board, asking it to also suspend Kapoor and then-Chief Operating Officer Aadi Vaidya, a friend from college, for their poor work performance and lack of leadership.
A representative of the company, Kapoor and Vaidya declined to comment. Vaidya resigned last week after seven years with Zilingo, explaining “now is the time to move on, clear my head and reset priorities.”
It’s a steep fall for Zilingo from just five months ago, when Bose’s fundraising efforts valued the company at US$1.2 billion.