Sequoia delays closing of $ 2.8 billion fund between probes; RBI undermines Sachin Bansal’s banking dreams

Since early 2022, a number of Sequoia-backed companies – BharatPe, Trell and Zilingo – have undergone internal audits on suspicion of financial fraud and lax corporate governance. Now, the legendary venture capital firm has told its limited partners that it has decided to postpone the closure of its $ 2.8 billion fund for India and Southeast Asia due to excessive caution.

So in this letter:
■ RBI deals a severe blow to Sachin Bansal’s banking dreams
■ Jungle Ventures raises $ 600 million towards the final close of the fourth fund
■ Twitter deal died with no fake account evidence, warns Musk


Sequoia postpones the closing of $ 2.8 billion of India’s SEA fund among probes in portfolio companies

sequoia

Sequoia Capital has has postponed the closing date of its $ 2.8 billion fund for India and South East Asia (SEA) after alleged financial irregularities and corporate governance issues were uncovered in some of its portfolio companies, sources told us.

E-mail to the LPs: The move was communicated to Sequoia’s limited partners (LPs) or fund sponsors, via an email, the content of which was reviewed.

It said, “… in recent weeks, shareholders of a portfolio company have received information on potential misconduct, which required an investigation. Given these events, we have decided to postpone the closing date of the funds,” he said. .

Sequoia LPs are typically US university endowments and blue-chip pension funds.

Companies under the scanner: Sequoia did not disclose the names of the companies “under investigation”. Since the beginning of this year, its portfolio companies Bharat Pe, Singapore-based Trell and Zilingo underwent internal audits on suspicion of financial fraud and corporate governance issues.

  • In January, BharatPe co-founder Ashneer Grover was embroiled in a huge controversy after a unexpectedly loading audio clips allegedly with him and a Kotak Mahindra Bank employee it went public. The issue escalated over the next two months, leading to the departure of Grover and his wife Madhuri Jain, who was the company’s head of controls.
  • The Indian founder of Zilingo, Ankiti Bose, was suspended by the company in April after alleged discrepancies were found in its accounts while conducting due diligence prior to a funding round. Bose had contested these allegations and challenged his suspension.
  • On April 4th we reported, citing sources, that Sequoia had asked Trell for an investigation after receiving complaints from whistleblowers.

RBI takes a shot at Sachin Bansal’s banking dreams

trivial sachin

By now you are likely to know that Chaitanya India Fin Credit, owned by Flipkart founder Sachin Bansal, was a banking license denied by the Reserve Bank of India (RBI). But the timing of the RBI announcement couldn’t have been worse for Bansal.

In the spotlight: It had just begun reporting to the media about the launch of Navi Finserv’s Rs 600 crore Non-Convertible Debt (NCD) issue when the RBI press release was uploaded to its website.

When Bansal finished briefing the media about what he said was a record for a fintech startup raising money through government debt, he was asked what he thought of the RBI’s rejection.

Quote: “We haven’t received the written answer yet. We will review it and then chart the next course of action. Of course, there are many options ahead of us and this is not the end of the road for us, including reapplication,” Bansal said. .

Why did the RBI reject it? The central bank did not explain why it denied Chaitanya Credit a permit. But industry sources aware of RBI’s thinking about “suitable and adequate” candidates for a banking license have previously told us that the application management (ED) investigation of Bansal into his involvement with WS Retail could be cause for concern. .

Which champion? Bansal and Flipkart co-founder Binny Bansal were on the board of directors of WS Retail, one of Flipkart’s largest sellers from 2009-2015. The ED believes this to be a violation of Indian laws. Bansal doesn’t think so and has taken the agency to the Madras High Court, where the matter is under discussion.

WS Retail no longer exists. It stopped operations in 2015 when the government began to tighten FDI regulations for e-commerce in India.

What does it mean: For Bansal, who is passionate about running a bank, this is not good news. It makes sense for an entrepreneur with high ambitions to build a large financial services company. It also comes with a pride quotient – think Uday Kotak, Deepak Parekh. A license could have put Bansal in their league.

Can he still become a banker? Only time can tell, really. Bansal is still fighting the ED case and a lot will depend on his outcome. However, this may take a long time.


Jungle Ventures raises $ 600 million towards the final close of the fourth fund

jungle

Jungle Ventures, a Singapore-based venture capital firm, has raised $ 600 million towards the final close of its fourth fund.

Details: The funding includes $ 450 million in Core Fund IV and $ 150 million in additional managed commitments, one of the largest equity pools available in the region, a senior executive at the company told us.

The fund, which has backed companies such as Livspace, Moglix and CityMall, has more than $ 1 billion in assets under management (AUM).

The fund, which set out to raise $ 350 million, was over-subscribed and exercised the green shoe option to raise more capital.

“Approximately $ 450 million has been invested in new companies and $ 150 million will go into subsequent investments to support a winning portfolio,” said Amit Anand, founding partner of Jungle Ventures.

ETtech business done

■ Fashinza, an AI-driven business-to-business (B2B) marketplace, has raised $ 100 million in a funding round led by Prosus Ventures (formerly Naspers Ventures) and Westbridge. The company will use the funds to create a sustainable supply chain and expand into new geographies, he said in a statement.

■ Melorra, a direct-to-consumer (D2C) jewelry brand, raised $ 16 million from Axis Growth Avenues, SRF Family Office, N + 1 and existing investors, in the first part of the Series D round. The funding includes $ 14 million in equity and $ 2 million in debt.

TWEET OF THE DAY


The Twitter deal can’t go on without evidence of fake accounts, Musk warns

Twitter

Elon Musk has announced his agreement to acquire Twitter “I can not move on” until the social media platform proves its claim that fake and spam accounts represent less than 5% of its users. Musk once again said that, according to his estimates, such accounts could represent more than 20% of Twitter users.

The number referenced here are the monetizable Twitter users who are active on the platform on a daily basis. The company claims that it has 226 million such users, and that less than 5% of those are fake or spam accounts.

Then read: Twitter loses three more senior employees before the acquisition of Elon Musk

Driving news: Responding to a report posted on Twitter by Teslarati, Musk wrote: “20% fake / spam accounts, while 4 times what Twitter claims, could be * much * higher.”

He added: “My offer was based on the accuracy of Twitter’s SEC documents. Yesterday, the Twitter CEO publicly refused to show the evidence

He later published a poll in which he asked: “Twitter claims that over 95% of daily active users are real and unique human beings. Anyone have this experience? “The options were a couple of laughing emojis and” who am I ?! “


CEO of Twitter Parag Agrawal had tweeted Monday that internal estimates of spam accounts on the social media platform over the past four quarters were “well below 5%,” responding to days of criticism from Musk about the company’s handling of fake accounts.

Musk responded to his thread with a poop emoji.

Why is Twitter silent about Musk’s “trolling”? Twitter, meanwhile, said the deal is moving forward. Reuters reported, citing sources, that the company believes Musk’s recent comments (and emojis) have violated the non-denigration terms of their agreement.

However, he has not taken any legal action against Musk for what he sees as his “trolling” of the deal, and plans to do so only if he does not perform the necessary tasks to complete the transaction, the sources said.

Then read:MoS Chandrasekhar responds to ‘Twitter engineer’ viral video


Celebrities need to do their homework before approving cryptocurrencies, the advertising body says

cryptographic approvals

Given that cryptocurrency is an unregulated product, the Advertising Standards Council of India (ASCI) he said celebrities should be “circonspect” when they approve of it.

Quote: “We have always argued that celebrities must do their due diligence on the claims they approve. The Consumer Protection Act also provides penalties for sponsors if the ad they appear in is found to be misleading and if they have not performed due diligence.” said Manisha Kapoor, CEO of ASCI.

The ASCI statement comes after a Hindu Businessline report said the Securities and Exchange Board of India (Sebi) recommended to the Standing Parliamentary Finance Committee that celebrities should not be allowed to approve cryptocurrencies and other virtual digital assets. VDA).

WazirX Transparency Report: A report released by WazirX on Tuesday claimed 17,218 accounts were blocked between October 2021 and March 2022, compared to 14,469 in April-September 2021. The number of accounts she intervened against increased by 19% between October 2021 and March 2022, compared to the previous six months, she said.


Other main stories from our reporters

Coinbase

Coinbase to slow down hiring: Coinbase cryptocurrency platform plans to go slow hiring amid a downturn in the US market. The company recently announced plans to triple its workforce in India. “Given the current market conditions, we believe it is prudent to slow down hiring and re-evaluate our staffing needs against our priority business goals,” said Emilie Choi, company president and chief operating officer.

5G will drive customer spending this year, Tech Mahindra says: Fifth generation or 5G technology should be a key factor in customer spending for Tech Mahindra in the current financial year, top executives told ET. The Mahindra Group company estimates the 5G market will reach over $ 600 billion by 2026, a staggering annualized growth rate of over 120% over six years.


Global choices we are reading

■ ‘Think Before You Link’: app launched to help social media users detect fake profiles (The Guardians)
■ Who will be Pakistan’s first unicorn? (rest of the world)
■ Crypto crash refocuses regulators’ attention on the industry (The Washington Post)

Today’s ETtech Morning Dispatch was curated by Zaheer Merchant in Mumbai and Judy Franko in New Delhi. Graphics and illustrations by Rahul Awasthi.