Sequoia Capital India pledges to take proactive steps amid fraud allegations at some startups – TechCrunch

Sequoia Capital India, one of the wealthiest and most successful investors in India and Southeast Asia, has settled allegations of fraud against several startups in its portfolio. and committed to taking proactive steps to do more to increase compliance.

In a blog post published Sunday afternoonThe venture fund said it was still a “work in progress” and said that all players in general must “promote better accountability, along with improved performance, so that we I’m tapping into the full potential this area has to offer.”

The post – which serves as Sequoia’s first official word on the matter – comes at a time when at least three startups in its portfolio have launched investigations:

  • Fashion marketplace Zilingo suspended Ankiti Bose, founder and chief executive officer, this month following an investigation into its accounting. The head of Sequoia Capital India, Shailendra Singh, has left the board. (Both developments were first reported by Bloomberg News.)
  • BharatPe co-founder and former chief executive Ashneer Grover stepped down from the $2.8 billion startup earlier this year after an investigation found he and his wife have withdrawn money. (Grover dismissed the study’s findings.)
  • Direct-trade startup Trell recently investigated claims that its founders siphoned off and lied about its growth and usage metrics.

Sequoia Capital India, which did not identify any of the startups, said it will work across multiple sectors, including:

  • Management training courses for founders and senior managers
  • Implement the whistleblower policy
  • More independent board representation
  • Requires more disclosure and stricter application of internal audits and controls

The post, written by the Sequoia team, says that it can often appear that investors do not do enough due diligence, but reminds that when investments are made at an early stage or at a later time That in the early stages, “almost no business comes due diligence. Even investors at a later stage can face negative surprises, post-investment, if intentional and fraudulent. ”

The article adds:

As an investor representative, a person serving on the board and the board can only work with the information shared with them – the less transparent the board is, the more likely it is to act. the lower their detection of misbehavior. The board of directors is there to govern and help make decisions that are in the best interests of the shareholders. The board is not responsible for ongoing investigations unless something official is brought to them, which is usually through a whistleblower. Better corporate governance is a shared responsibility among founders, management, and the board of directors. And to get there, the ecosystem needs to get together and commit to making some changes.

At Sequoia India & SEA, we pride ourselves on integrity because we’ve been doing it for a long time. We will take a series of proactive steps as responsible participants of this ecosystem and do our fair share to drive increased compliance across companies in the region. our portfolio, including but not limited to, governance training for founders and senior management, implementation of whistleblower policies, more independent board representation, requirements more disclosure and stricter application of internal audits and controls.

We will continue to respond strongly when we encounter intentional misconduct or fraud. When whistleblowers call us to report problems, we take them seriously. We know in some cases they can turn out to be unfounded – but we still have to look at them because it’s the board member’s fiduciary duty. We will continue to have zero tolerance for proven misconduct. We will not hesitate to act to protect the interests of the company and its employees, even if it costs us financially. We will make tough calls when necessary for the sake of doing what’s right.

We hope more people in the ecosystem will join us in our commitment to better governance. […]

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