Bikayi’s Crash & Burn: Another Sequoia-Backed Startup Goes The Zilingo Way

This is the second part of our investigation into Bikayi, and when we looked back at how the company shot to fame suddenly, we couldn’t help but think of another Sequoia portfolio startup that has also found itself in controversy in 2022.

• Like Bikayi, Zilingo was also founded with the idea of revamping a traditional market. Where Bikayi went after small sellers and kiranas that dot India’s towns, Zilingo — founded by Ankiti Bose and Dhruv Kapoor in 2015 — was said to be inspired by bustling, unorganised street fashion markets in Thailand.
• Bikayi started off in 2019 — founded by Sonakshi Nathani and Ashutosh Singla — and quickly raised funds to sell its idea. Besides Y Combinator and Sequoia, Mantis VC, the fund founded by pop sensations Chainsmokers, also invested in Bikayi. A glamorous investment — not unlike Jay-Z’s Arrive backing Zilingo at the tail end of 2019.
• And in both cases, there was a clear division of responsibilities and focus areas between the two sets of founders — while Zilingo’s Bose and Bikayi’s Nathani were seen as the faces of the company, Kapoor and Singla were both largely and primarily responsible for the tech and product.

It would have been great if that’s where the similarities between the two companies ended.

But at the moment, it looks like Bikayi is doomed for the same fate as Zilingo — after months of stagnation, seller exodus and revenue decline, Bengaluru-based Bikayi is on the verge of collapse. Here’s the second part of our story.

Bikayi Sheds 90% Workforce 

As it looks to plug many of the glaring holes in its business model and cut costs after the massive revenue decline, Bikayi has now laid off up to 90% of its workforce, and its new Bik.ai  pivot to catering to enterprises and larger brands has got off to an underwhelming start.

Besides this, Inc42 has learnt from at least three former employees that many of those who have been dismissed are considering sending legal notices to Bikayi’s India entity Comida Technologies Pvt Ltd. Employees are looking to recover the unpaid salaries, sales incentives and in many cases, even pending leaves that employees were not allowed to encash.

Since our previous story on Bikayi on July 28, where we outlined how the company’s weak tech platform coupled with a misplaced sales strategy had resulted in the company laying off certain employees and seeking resignations from others.

We had reported that the company had roughly 240 employees at that time. But on July 30, nearly 200 employees resigned en masse as the August 01 deadline to move to Bengaluru under the new working conditions neared. Employees had to take a final decision on whether they would be moving to Bengaluru or leaving their positions.

At least two former employees told Inc42 that Bikayi currently has between 40-45 employees left. This is largely the tech team, the founders, the compliance head as well as one or two employees on the HR and admin side.

Many more employees are likely to be fired after a period of performance reviews by managers, we were informed. And these performance reviews are also alleged to be opaque and without any process.

Responding to our questions earlier, Bikayi cofounder and CEO Sonakshi Nathani had claimed that the company was looking to hire aggressively since it had expanded its office space between March and May 2022. It is not yet clear whether Bikayi will terminate its lease for this expanded office space, which is said to have been two floors at a property in HSR Layout.

According to one employee who left the company on Saturday, July 30, the company does not even want the resigning employees to serve their notice periods. “We were told that there would also be no leave encashment and the full and final settlements would arrive in 45 days. But we are not confident about getting paid,” said one employee who was asked to take a pay cut while also moving to Bengaluru.

New Product; Same Failures

Another former senior sales manager told Inc42 that Bikayi terminated the employment of several sales team leads on August 01 and 02. The source added that even with the full team the new Bik.ai product was proving to be a hard sell because once again the company told sales executives to make claims that were not backed by product development.

For instance, the first 12 larger brands and ecommerce sellers onboarded as clients for Bik.ai were told that they would be getting a ‘Green Tick’ verification on WhatsApp if they signed up for a fee of INR 11,800 (including GST).

While many seem enthused with the idea of getting the verified WhatsApp Business accounts, Bikayi’s tech team realised that this proposition could not be fulfilled by Bikayi. The team also realised that the flat fee was too low and that the revenue dependency on customers buying more credits to message users was too high.

So the pricing strategy changed once again. “We were told to get these signed-up customers to sign a new contract, which would stipulate spending at least INR 30,000 per month on WhatsApp credits through Bik.ai. Not one customer agreed,” said the senior sales manager quoted above.

Besides this the product itself was not delivered for at least three weeks despite the customers paying for it. So naturally, there was very little faith in the company delivering on its other promises. “Even speaking from a tech point of view, they are doing nothing but building on the WhatsApp API. It’s nothing new and everyone from Haptik to Wigzo to GupShup can offer this functionality,” the source added.

Will Bikayi Go The Zilingo Way?

Currently, there’s no clarity on how much cash reserves Bikayi has in the bank. According to Nathani, the company has received a cash infusion in May 2022 in its US parent entity, but this information has not been corroborated by any existing investor in Bikayi.

Backed by the likes of Y Combinator and Sequoia, Bikayi has raised over $12.8 Mn in its lifetime.

Bikayi was speculated to be raising $50 Mn from Tiger Global as per reports in January this year, but Inc42 has learnt that no such round was in the works. As per sources close to the US-based VC giant, no term sheet was offered to Bikayi nor was one considered.

However, we were informed that Sequoia Capital India pulled a term sheet it was set to offer to Bikayi upon a closer look at its operations and the house of cards built on top of low-quality counterfeit sellers. Another parallel with Zilingo, whose funding efforts were also scuppered by a due diligence probe last year.

Sequoia Capital India declined to comment on the speculation of pulling the term sheet offered to Bikayi.

Indeed the counterfeit sellers were a major breaking point for Bikayi. The company was sent legal notices by sellers as well as smartphone giant Vivo India for allowing Vivo smartphones to be resold on Bikayi-run stores. Besides this, a UK-based fashion brand is also said to have sent a similar notice to take down sites that were selling first copies.

Inc42 has learnt that as much as 95% of the company’s revenue growth since November 2021 had come on the back of the revenue earned through sellers that were later found to be violating terms related to selling counterfeit products.

So what next for Bikayi? As the revenue pipeline has dried up, the company is left with no option but to let go of all employees that were related to the previous model which was reliant on selling to SMBs and sellers.

The biggest loophole in Bikayi’s plan is that it has no expertise in catering to enterprise clients or large businesses. From everything that we have learnt in the course of our investigation into the company, the fault lies in the fact that the technology and the model itself is flawed.

The question staring at us: is Bikayi just another Zilingo in the making — or has it actually beaten Zilingo to the valley of death already?