Sequoia Capital India, one of the prolific and profitable traders in India and Southeast Asia, addressed the fraudulent practices allegations levelled towards a few of its portfolio startups and pledged to take proactive steps to do extra to drive elevated compliance.
In a weblog submit printed Sunday afternoon, the storied enterprise fund mentioned it’s nonetheless a “work-in-progress” and mentioned that every one gamers collectively need to “drive higher accountability, together with enhancing efficiency, for us to unlock the total potential this area has to supply.”
The submit — serving as Sequoia’s first official phrase on the matter — comes at a time when not less than three of its portfolio startups have undertaken investigations:
- Style 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 just lately investigated claims that its founders siphoned off cash and lied about its utilization and development metrics.
Sequoia Capital India, which didn’t establish any startup by title, mentioned it’s going to 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 submit, written by the Sequoia workforce, mentioned that it could usually seem that traders don’t do sufficient due diligence, however reminded that when investments are made at seed or throughout a later time inside the early stage, “there’s hardly a enterprise to diligence. Even later stage traders can face unfavorable surprises, submit funding, if there’s willful fraud and intent.”
The submit 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 really unearth errant behaviors. The board is there to manipulate and assist make selections in the perfect curiosity of the shareholders. The board just isn’t accountable to analyze on an ongoing foundation except one thing formally is introduced up with them, which is usually by a whistleblower. Higher company governance is a shared accountability 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 justifiable share 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 instances they could transform baseless – however we nonetheless need to 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 staff, even when it prices us financially. We are going to take powerful calls the place wanted within the curiosity of doing what is correct.
We hope extra folks within the ecosystem be a part of us on this pledge to larger governance. […]
