Addressing allegations of fraudulent practices made against some of its portfolio startups, Sequoia Capital India, one of the most prolific and successful investors in India and Southeast Asia, vowed to take proactive steps to do more for better compliance to do.
In a blog post published on Sunday afternoon, the renowned venture fund said it was still “a work in progress” and said all stakeholders together “need to drive better accountability and improved performance so that we can realize the full potential this region has.” to offer.”
The post — which serves as Sequoia’s first official word on the matter — comes as at least three of its portfolio startups have been conducting investigations:
- Fashion marketplace Zilingo suspended Ankiti Bose, its founder and CEO, this month following an accounting investigation. Sequoia Capital India head Shailendra Singh has left the board. (Both developments were first reported by Bloomberg News.)
- Ashneer Grover, co-founder and former CEO of BharatPe, resigned from the $2.8 billion startup earlier this year after an investigation found he and his wife had siphoned money. (Grover has refuted the results.)
- Live commerce startup Trell recently investigated claims that its founders siphoned money and lied about its usage and growth metrics.
Sequoia Capital India, which did not identify a startup by name, said it will be working on a variety of things, including:
- Governance training for founders and executives
- Implementation of whistleblower policies
- More independent board representation
- Demand more disclosures and stricter implementation of internal audits and controls
The post, written by the Sequoia team, said that it often seems that investors do not exercise due diligence, but recalled that “there is little business when investing early or later in the early stages.” be done for diligence. Subsequent investors can also be confronted with negative surprises after the investment if there is intentional fraud and intent.”
The post adds:
As an investor representative, you serve on the board, and boards can only work with the information given to them – the less transparency the board has, the less ability the board has to really detect wrongdoing. The Board of Directors is there to guide and make decisions in the best interests of shareholders. The Board is not responsible for conducting ongoing investigations unless formally raised, which is often through a whistleblower. Better corporate governance is the shared responsibility of founders, management and the board of directors. And to get there, the ecosystem needs to come together and commit to some changes.
At Sequoia India & SEA we have always adhered to high integrity because we are in this for the long haul. As a responsible participant in this ecosystem, we will take a number of proactive steps and do more than our fair share to promote compliance in our portfolio companies, including but not limited to governance training for founders and executives, implementation of whistleblower policies , a more independent representation of the board, which calls for more disclosures and stricter implementation of internal audits and controls.
We will continue to respond vigorously when we encounter cases of willful misconduct or fraud. When whistleblowers call us to report problems, we always take them seriously. We know that in some cases they may turn out to be unfounded – but we still need to investigate them as it is a director’s duty of loyalty. We will continue to have zero tolerance for proven wrongdoing. We will not hesitate to protect the interests of the company and employees, even if it costs us financially. We will make tough decisions when necessary to do the right thing.
We hope that more people in the ecosystem will join us in this promise of better governance. […]