Fashion startup Zilingo has been the talk of the town for a while. It became the centre of attention when it suspended its 30-year-old chief executive officer Ankiti Bose over alleged financial irregularities. Although Ankiti denied any wrongdoing, the company’s survival is on the rocks now.
What caused Zilingo’s fall? A startup that raised more than $300 million from some prominent investors such as Temasek Holdings Pte and Sequoia Capital India. After all, did Ankiti Bose, the celebrity entrepreneur, go wrong? Reports suggest that her mismanagement has played a crucial role in the epic fall of Zilingo. She alienated employees, undermined business, and pumped money without considering the consequences.
Bose came up with the idea of Zilingo to support small entrepreneurs who sell goods from across Thailand. She and co-founder Dhruv Kapoor started the platform with an aim to support such merchants to connect with consumers across Southeast Asia.
Shailendra Singh, head of Sequoia India, a long-term friend of Ankiti, supported her. He invested in Zilingo’s seed round in 2015. Ankiti was 23-year-old then. But, the business faced challenges as Southeast Asia is a fragmented region with different languages and currencies. So, in 2017, they repositioned Zilingo into a B2B platform where small manufacturers and wholesalers could sell goods directly to small retailers.
Zilingo raised $54 million in 2018. The company spent $1 million on nine social media influencers, aiming to bring in $1 million new users. But, it failed. However, it seems, Ankita did not learn a lesson. She continued to invest in new initiatives to supercharge growth. One such idea was to give out loans to suppliers and vendors who needed capital. It took off initially, but backfired later, especially with the pandemic.
Despite the confusion, Ankiti became a star in the startup industry. In 2019, Zilingo raised $226 million and its valuation hit $970 million. Even James Perry, former managing director and Asia-Pacific head of technology investment banking for Citigroup Inc., joined Zilingo as its first chief financial officer.
In 2019, Ankiti decided to spend $100 million to expand Zilingo into the US with offices in New York and Los Angeles. Within a year, the company closed its US operations.
Singh and other directors advised Ankiti to slow the cash burn. However, he did not receive financial reports from her. Later, it shocked the board to know that the company was spending from $7 million to $8 million a month. The $226 million Zilingo raised from investors vanished within two years. The rapport between Singh and Ankiti soured.
In 2020, the pandemic adversely affected the business. Ankiti inked a deal with India to supply 10 million KN-95 masks, valued at $22.5 million. Since the company could not deliver it on time, India sued the company. The lawsuit is still going on.
The nail in the coffin was when Zilingo’s board received alleged mismanagement and financial misrepresentation by Ankiti and they suspended her during an investigation by a forensic team.
Ankiti’s leadership story is a lesson for startups. Under her leadership, Zilingo jumped from one strategy to another to generate sales. The hyper-growth mode has brought this fate on Zilingo. Moreover, Zilingo’s story highlights the relaxed corporate governance culture that is quite common in the startup industry. Could this have been avoided had the board acted a bit early? The question remains.
