The company, which supplies technology to apparel merchants and factories, had been trying to raise $150 million to $200 million with help from Goldman Sachs Group Inc. when investors began to question its finances as part of the due diligence process, said the people, asking not to be identified because the information is confidential. The talks, which could have boosted Zilingo’s valuation to more than $1 billion, stalled, they said.
The startup’s investors, which include Temasek Holdings Pte and Sequoia Capital India, have started an investigation into the financial practices, the people said. Zilingo’s auditor raised questions about its accounting, they said. The concerns center on the way that Zilingo, which regulators said had not filed annual financial statements since 2019, accounted for transactions and revenue across a platform spanning thousands of small merchants.
Bose has disputed allegations of wrongdoing and contends her suspension was due in part to her complaints about harassment, according to two people close to the situation. She has hired an attorney to represent her, Abraham Vergis of Providence Law Asia, and has called the investigation a “witch hunt,” according to correspondence reviewed by Bloomberg News.
Zilingo and Temasek declined to comment.
Two of Zilingo’s directors, Temasek’s Xu Wei Yang and Burda Principal Investments Ltd.’s Albert Shyy, left its board last month, according to regulatory filings. Zilingo had hired James Perry, a Citigroup Inc. veteran, as its chief financial officer in mid-2019, but he left about a year later to return to the U.S. bank.
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The clash represents a dramatic turn of fate for one of Singapore’s most celebrated startups. Zilingo was founded by Bose and Chief Technology and Product Officer Dhruv Kapoor in Singapore seven years ago to help small businesses across South and Southeast Asia sell their goods online.
The company began by working with small merchants that sell to consumers, and then expanded into adjacent areas. As the founders started talking with small sellers, they realized many lacked access to robust technology and essential capital.
That led them to develop software and other tools that would allow merchants to access factories in places like Vietnam or Bangalore, and would smooth the complicated process of shipping across borders. In 2018, Zilingo began to team up with financial technology firms to provide working capital to small sellers so they can buy raw materials to produce goods.
In early 2019, Zilingo raised $226 million from investors including Sequoia and Temasek, and pushed its valuation to $970 million, almost the $1 billion mark that earns startups designation as a unicorn. Bose, then 27, was celebrated as a visionary and a sign of the entrepreneurial potential for Southeast Asia.
“We were a bunch of twenty-somethings with nothing except this dream and we decided to chase it,” she said at the time. Bose had worked at Sequoia earlier and had said the experience helped her build the startup.
Zilingo, which had grown into a full-blown marketplace for wholesale buyers and sellers in the fashion industry, faced growth troubles after pandemic-fueled restrictions forced many small businesses to shut their doors. To rein in its own costs, Zilingo said it cut a number of jobs in 2020 and downsized marketing, sourcing and support teams in the U.S., Australia, Singapore and Indonesia.
The company made an aggressive pitch in its latest effort to raise fresh capital. Late last year, it forecast that core net revenue would rise from about $40 million in fiscal 2021 to roughly $60 million in fiscal 2022 and $100 million the year after, according to presentation documents reviewed by Bloomberg News. Zilingo said it anticipated breaking even on core Ebitda — or earnings before interest, taxes, depreciation and amortization — in fiscal 2023 and then reach almost $200 million in fiscal 2026.
On March 31, Bose was called to a meeting with three board members and told about “serious” complaints about discrepancies in accounts and mismanagement, according to the correspondence reviewed by Bloomberg. She was later questioned by two people from Kroll, the investigations firm. Her suspension is scheduled to run until May 5.
Bose, through her lawyer, has argued that the directors did not follow proper procedures during the process and questioned their right to suspend her, according to the correspondence from her attorney to Zilingo.
“We are of the view that our client’s suspension has been procured by invalid and defective means; that the investigation commenced into her is unfair and lacking in due process, and that she has been suspended without proper and reasonable cause,” her attorney wrote.
