The last two years have been good for the Indian startup scenario. The year 2021 witnessed 44 startups entering the unicorn club. In 2022, as of now, 14 startups have become unicorns. However, the scenario is not devoid of controversies. Here are some of the most controversial incidents that shook the Indian startup ecosystem.
One of them has been BharatPe ousting its founder Ashneer Grover who allegedly hurled death threats and abuses at a Kotak Bank employee for not securing allocation in Nykaa’s blockbuster IPO. Although Grover took a voluntary leave, he had to resign within two months from the $3 billion-worth enterprise he built. It was because the independent audit reports organised by BharatPe following Grover’s leave brought to light his wife Madhuri Jain’s connection to some financial fraud.
Shashvat Nakrani, another cofounder of BharatPe, later accused Grover of creating a false narrative about the startup and supported the board’s call for ousting Grover based on the auditor PwC’s report.
Social commerce startup Trell fell into controversy while it was waiting for a 100 mn funding that would have elevated the startup to the unicorn status. An internal investigation by EY India found anomalies in Trell’s financials and alleged its founders of doing third-party transactions. This caused the loss of $100 Mn funding, and it decided to lay off almost 50% of its employees.
In another event, officials from the Income Tax Department conducted raids at 23 offices of B2B unicorn InfraMarket and seized an amount of incriminating evidence, including undisclosed income worth INR 224 Cr. The raid happened in March at its offices in Maharashtra, Karnataka, Andhra Pradesh, Uttar Pradesh, and Madhya Pradesh, and the residences of its founders.
As per the I-T Department, the directors of the unicorn admitted to a modus operandi of falsifying purchases; making large, unaccounted cash expenditures; and fake accommodation entries to achieve more than Rs 400 Cr.
Singapore-based B2B fashion marketplace startup Zilingo landed in a soup when its founder Ankiti Bose was suspended during an internal investigation into the startup’s accounting practices and finances. Later, it was brought to light that the relationship between Bose and cofounder Dhruv Kapoor had not been in sync for many years due to their differences in vision for the company and the cultural disparity between operations and technology. Besides, Bose alleged that she faced harassment in 2021. The startup’s board has appointed Deloitte to investigate this. Currently, the startup has no CEO. Besides, Sequoia Capital’s Shailendra Singh also stepped down from the startup’s board along with Temasek Holdings Pte’s Xu Wei Yang and Burda Principal Investment Ltd’s Albert Shyy.
The year also saw Singapore-based e-commerce player Shopee leaving India citing market uncertainty as a reason. The exit left 300 employees jobless.
The most controversial of all has been the fire incidents linked to electric vehicles of Ola, Okinawa, and PureEV. It started with a viral video of Ola Electric’s S1 Pro e-scooter catching fire in Pune. Ola Electric has also been in the news for untimely delivery and malfunctioning of its EVs. Following the incidents, the government formed a team to investigate the fire incidents, and Road Transport Minister Nitin Gadkari asked EV makers to recall defective batches of vehicles.
In another controversial episode, tier-I investors-backed startups laid-off employees, mostly to achieve profitability. So far, six unicorns laid off around 1,900 employees. Edtech startup Lido fired 150 employees due to a cash crunch. Lido couldn’t raise a fresh round of funding and was finding it difficult to pay salaries to its employees. Around 40 employees of Tiger Global-backed OkCredit were laid off. The second-largest edtech startup Unacademy laid off around 1,000 employees. As per the report, it was based on their performance and also to cut costs and achieve profitability. Furniture rental startup Furlenco fired 180 employees while Facebook-backed Meesho laid off 150 employees. The latest on the list is Bengaluru-based edtech unicorn Vedantu which laid off around 200 employees.
