Sequoia Capital on Sunday indirectly breaks silence over the controversy at fintech firm BharatPe. The American venture capital firm said that it has zero tolerance toward proven wrongdoing and will take tough calls where needed in the interest of doing what is right.
Currently, Sequoia is the largest shareholder in BharatPe whose co-founder Ashneer Grover was virtually sacked from his role earlier.
In its blog, Sequoia said, “Recently some portfolio founders have been under investigation for potential fraudulent practices or poor governance,” adding, “These allegations are deeply disturbing.”
Although, the US firm did not directly mention BharatPe in its blog.
“We have always strongly encouraged founders to play the long game. We focus on the enduring and discourage focussing on vanity metrics. Despite that, we find some counter-examples of what we espouse. It makes us reflect on what we could have done, along with other investors who have partnered in these companies, to prevent such situations,” Sequoia added.
Sequoia in its blog added, “We want great companies to be built that are not just valuable but also enduring – and that can only happen if the values are right and the government is strong. We think it’s time for us, as an ecosystem, to sign up for better governance. “What” has been achieved is now clear – we think it’s time to improve on the “how”.”
The venture capital firm pointed out that as an ecosystem, they have delivered some big outcomes through the IPOs and exits and through the several unicorns and decacorns created over the last few years.
Emphasizing on still wanting founders and the entrepreneurial energy to drive companies because founders provide the vision, mission and drive the culture and values, Sequoia in its blog adds, “but we need some guardrails that we, as an ecosystem, sign up to so that a few errant founders don’t create big setbacks for the wider ecosystem at large.”
“As a startup ecosystem, we are still a “work-in-progress” and we collectively have to drive better accountability, along with improving performance, for us to unlock the full potential this region has to offer,” the company said.
Highlight its role as an investor representative, Sequoia stated that “one serves on the board, and boards can only work with the information shared with them – the less transparency there is to the board the lesser their ability to truly unearth errant behaviors. The board is there to govern and help make decisions in the best interest of the shareholders.”
Further, Sequoia said that the board is not responsible to investigate on an ongoing basis unless something formally is brought up with them, which is often through a whistleblower. Better corporate governance is a shared responsibility between founders, management, and the board. And to get there the ecosystem needs to come together and commit to some changes.
Sequoia said, “We will continue to respond strongly when we encounter willful misconduct or fraud. When whistleblowers call us to report on issues, we always take them seriously. We know in some cases they may turn out to be baseless – but we still have to look into them as it is a board member’s fiduciary duty. We will continue to have zero tolerance towards proven wrongdoing.”
Also, the company said, “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.”
Sequoia hopes that people in the ecosystem join us on this pledge to greater governance.
It added, “We believe India and SEA markets are well poised to be amongst the most attractive tech and venture markets globally. At Sequoia India and SEA, we aspire to be long-term participants in this ecosystem and are willing to do whatever it takes to encourage good behavior and continue to move towards making this a world-class ecosystem!”News Source: Mint