in a leaked audio clip of his purported conversation with a Kotak Mahindra Bank official, an email exchange has surfaced between him and the firm’s investor Sequoia Capital India, further intensifying the scrutiny on the entrepreneur.
As per a communication ET has reviewed, Grover had an altercation with Sequoia India’s Harshjit Sethi in August 2020 wherein the BharatPe founder allegedly used expletives over the course of the conversation. Sethi, who has been with Sequoia Capital India since 2015, was promoted to as a managing director in the venture team in July last year.
ET in its January 16 edition
has reported about the allegedly aggressive behaviour of Grover and the silence of the company’s board.
“Messages and threats from you (Grover) over the last few days and months have been hurtful and disappointing… Specifically we have heard your message of not wanting us on the cap table […] We need to have a decisive conversation about how the relationship between Sequoia and BharatPe changes going forward,” Sethi wrote in a mail to Grover in August 2020.
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The email was also marked to Shailendra Singh, managing director at Sequoia Capital, who is among the senior partners at the Silicon Valley firm. Singh, who is based in Singapore, oversees Sequoia’s India and Southeast Asia operations.
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The disagreements between Sethi and Grover began after BharatPe’s Series B funding was delayed due to Sequoia not committing to the round. People familiar with the incident said that Sequoia had also raised concerns about Grover wanting to partially sell shares in a secondary transaction. This resulted in creating friction between Sequoia and Grover, which eventually led to the mail exchange.
In the mail communication, Sethi suggested “pausing” BharatPe’s participation in Sequoia’s Pitstop, its annual fundraising and networking event for growth-stage startups.
BharatPe had racked up its Series B financing in February 2020 from investors like Coatue Management, Ribbit Capital and US-based Amplo. Sequoia Capital was not part of the funding.
“Ashneer wasn’t happy with Sequoia not committing to the funding round while other investors had put in their term sheets… As a founder, the best way to get conviction from an investor is when you receive the term sheet in time…,” a person briefed on the matter said.
At least four people, aware of this argument, verified the spat between Grover and Sethi and confirmed the veracity of the emails exchanged.
“Sequoia Capital India was an early investor in BharatPe and has continued to back us in the most recent funding rounds, which is a testament of their trust in our business…” said Suhail Sameer, BharatPe’s chief executive, while responding to ET’s queries sent to Grover.
A Sequoia Capital India spokesperson said, “We do not wish to comment on private correspondence between us and a founder. However, we can confirm that the communication you are referring to between Sequoia India and BharatPe was resolved more than a year ago… It is not appropriate for us to comment on all other matters at this stage.”
Sethi, in the email exchanges with Grover, said it was best to let people know that “the company” (BharatPe) was not raising funds till the two parties resolved their relationship. He was referring to investors BharatPe and Grover were supposed to meet as a part of PitStop.
To this, according to the mail trail ET has seen, Grover replied: “I will personally email the investors we were supposed to meet…clarifying the truth that we are ‘fundraising’ and maybe Sequoia did not want us to spoil chances on fundraise of their ‘more favoured’ companies and therefore pushed us out.”
In addition, Grover, in the email exchange, also alleged Sequoia’s Sethi was getting BharatPe into executing an up to $3 million secondary transaction, causing BharatPe to ‘unwillingly’ raise its primary valuation, but it wasn’t approved by senior partners of Sequoia. Grover added that despite this, he was offering a secondary transaction window to Sequoia in the next funding round, whenever that would get finalised.
“For the sake of keeping this legal — I categorically deny any threats to Sequoia,” Grover said in his reply to Sethi, adding that the VC fund’s backing out made him look “diabolical and foolish” in front of incoming investors.
Much at stake?
While internally the relations between the two were turning sour, Sethi in a tweet in August last year congratulated Grover on turning unicorn
following a $370 million fundraise. Sequoia’s 19.6% stake in BharatPe is now worth around $560 million. Sethi’s tweet said Sequoia was a “proud” partner from Day 1.
Sequoia Capital has invested $50 million in BharatPe’s successive rounds since the spat, an internal source at the fund confirmed to ET. This is across the company’s $108 million Series D and $370 million Series E rounds last year, which bolstered the startup’s valuation to $2.85 billion.
“Since the constant arguments, Sequoia has kept some distance from BharatPe’s day-to-day matters. While it continues to back BharatPe in terms of investments due to the focus on returns, it has kept Grover at an arm’s length. Therefore, their public silence now is not shocking,” said a former executive at BharatPe.
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This incident has come to the fore at a time when people across the startup ecosystem have questioned Grover and his position in the company following Kotak Mahindra Bank’s statement with respect to “a legal action” being “considered” against the startup founder.
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“As much as Grover’s public outburst on his personal investments is damaging to BharatPe, this issue shows a glaring absence of corporate governance in what is one of the prominent companies in the payments space and multiple people were aware of a conflict of this nature early on,” said one of the people aware of the spat with Sequoia.
