Sequoia announces steps to tackle ‘willful fraud’

Sequoia India has announced new measures to drive better compliance across its portfolio companies, which include governance training for founders and senior management, implementation of whistleblower policies, and a more rigorous adoption of internal audits and controls.

The new measures come in the wake of a few startups under Sequoia’s portfolio facing issues such as financial irregularities.

Photo credit: Sequoia

“Even later-stage investors can face negative surprises, post investment, if there is willful fraud and intent,” the investment firm said in a blog post.

Sequoia is one of the top investors in the Indian startup ecosystem. It has also backed the highest number of Indian unicorns in their early stages, Tech in Asia analysis showed.

One of its major portfolio firms in Zilingo, a Singapore-based fashion ecommerce platform that recently suspended its founder Ankiti Bose over allegations of financial discrepancies. Ashneer Grover, co-founder of India-based fintech firm BharatPe, was also booted from his company earlier this year over alleged financial irregularities.

Additionally, live commerce firm Trell has launched a probe into allegations of its founders siphoning off money and misleading investors about usage and growth, according to a TechCrunch report.

Describing the allegations against portfolio founders as “deeply disturbing,” Sequoia cautioned that these issues shouldn’t be attributed to poor due diligence alone. As a course correction, the VC firm said it will respond strongly if it comes across any willful misconduct or fraud. It will also take issues raised by whistleblowers more seriously.

See also: Did Sequoia India do enough due diligence on Telio?

“We won’t hesitate to act to protect the interest of the company and employees, even if it costs us financially. We will take tough calls where needed in the interest of doing what is right,” the firm added.