Inside Zepto’s Secret Equity Battle: Feuding Teenagers, Alleged Threats & The Nexus Connection 

We all know Facebook’s origin story — the bitter feud between the founders memorialised in the smart-as-whip 2010 movie The Social Network. It’s a story that has coloured our perception of Mark Zuckerberg, but it’s also a look inside the brutal reality of being an entrepreneur. So in a way, it’s a story of all startups. But the similarity is uncanny in the case of Zepto, the Mumbai-based quick commerce sensation that rose to prominence in 2021.

After weeks of research and investigation by Inc42, the story of Zepto mirrors the power struggle in The Social Network, with some of India’s biggest lawyers involved and billions at stake. Along the way we have seen a first information report filed against Zepto’s founders and its investors, filings of appeals against this FIR and the investigation, spoken to sources close to the parties involved to get a full picture.

Here we have two teenaged founders — 19-year-olds Aadit Palicha and Kaivalya Vohra — vs 20-year-old Ansh Nanda, another student-entrepreneur. While Palicha and Vohra are Zepto’s founders, Nanda alleges that he was promised enough equity to be counted as a cofounder when the company was still called KiranaKart.

And between them are a slew of allegations, including alleged threats involving the underworld, promises of equity and more, involving not just the trio, but also storied Indian investors such as Nexus Venture Partners and personalities such as Nexus’ managing director Suvir Sujan, as well as Y Combinator, one of the largest early-stage startup investors in the world.

All for a piece of one of the hottest startups in India today, which is on the verge of becoming a unicorn after raising over $160 Mn in a matter of months last year.

The feud led to Ansh Nanda filing a police complaint against the founders of Zepto and its board of directors, Nexus Venture Partners and Sujan.

In the FIR, Nanda alleges that Aadit Palicha, Kaivalya Vohra and Sujan squeezed him out of the startup after making false promises of equity.

The police complaint also resulted in three separate Section 91 notices being sent to the accused which would have required Zepto to open up its records and books to the police. Section 91 notices are sent by law enforcement to gain access to documents and material pertaining to a criminal investigation.

But these notices and the FIR itself were appealed by Zepto’s management and its investors, and the battle was settled out of court eventually, as per sources. However, that does not diminish the severity of some of the allegations against Zepto founders Palicha and Vohra, early-stage investor and Silicon Valley giant Y Combinator, as well as Nexus Venture Partners and its founder Sujan.

Ansh Nanda or his family declined to speak to us, so we could not independently verify many of the claims. Much of the picture has emerged from the FIR, with other documents, court filings and sources filling in the gaps.

With investors of this pedigree involved, there are some pertinent questions about due diligence and the responsibility of the VC in tackling such a standoff between young founders of a startup that’s becoming an inspiration to the next generation of Indian entrepreneurs.

KiranaKart To Zepto: From YC To A Pivot

The bright purple uniforms of Zepto’s delivery riders and the startup’s bright outdoor ads are now ubiquitous in Indian metros. The company came out of nowhere and grabbed the limelight with two major funding rounds last year, which gave it a valuation of $570 Mn in under six months of operations as Zepto.

But this sudden rise and surge in Zepto’s popularity hides some of the growth pains as seen through court filings and appeals. 

Teenagers and college dropouts — it’s a heady combination for VCs and one that again brings the comparison back to Facebook.

Zepto began as KiranaKart (KK), which was selected and backed by famed Silicon Valley accelerator Y Combinator (YC) in November 2020 as part of its Winter 2021 cohort. Palicha and Vohra, the two founders of the company, were seen as sought-after founders given that they were just 19 years of age and had claimed to have dropped out of Stanford University to pursue entrepreneurship.

As per its profile on YC, Kiranakart was described as “a logistics startup that digitises neighbourhood stores or kiranas by allowing customers to place an order through its app”.

As per this screengrab from the Internet Archive, KiranaKart was not only quite distinct in terms of visual identity from Zepto, but also in its business model. At that time, it was essentially operating in a B2B2C model, matching consumers to nearby kiranas through its app. KiranaKart pivoted into a B2C quick commerce player under the Zepto name in April 2021.

Enter Ansh Nanda, The ‘Third’ Zepto Cofounder

It was in November 2020 that Ansh Nanda claims to have come across KiranaKart founders Palicha and Vohra. Nanda goes into depth about his early interaction with the duo in his FIR, a copy of which has been reviewed by Inc42.

In the FIR filed under Sections 420/506/34 of the Indian Penal Code, Nanda names Singapore-registered KiranaKart Pte Ltd, its Indian subsidiary KiranaKart Technologies Private Ltd, Palicha, Vohra, Nexus Venture Partners, Nexus’ Sandeep Singhal, Suvir Sujan and Anup Gupta as accused, along with company directors Shruti Shailraj Brahmbhatt and Manish Jain.

Nanda says he had sent in an application for his own startup to Y Combinator in November 2020, where he was set to meet Tim Brady, a partner at the incubator. To prepare for this interview, he claims to have contacted other founders that were selected by YC in the past, and that’s when he came across Palicha and Vohra as well as KiranaKart and contacted them. But his application to YC was rejected by Brady on December 2, 2020.

Following this, he claims he contacted Palicha and Vohra again to prepare for a second attempt at YC, but the duo allegedly discouraged him from applying for a second time, since YC is unlikely to invest in a second-time applicant. Instead, they allegedly offered to bring him on board KiranaKart as a cofounder.

Y Combinator and Tim Brady did not respond to questions about Ansh Nanda or his application to YC in 2020. Y Combinator owns 3,44,877 shares in KiranaKart’s Singapore parent entity.

Inc42 has reviewed transcripts of Aadit Palicha and Ansh Nanda’s WhatsApp conversations between December 17, 2020 and April 9, 2021, which were used to support the FIR.

In his FIR, Nanda claims that taking up the KiranaKart offer would have meant dropping out of college and taking a gap year, so he had to understand the “details of the operation and management of the company” before making a decision. This too is hinted at in the chat messages.

But by late December 2020, Nanda was on board. He visited Mumbai to meet Vohra and Palicha and even stayed with the founders, which is corroborated by chat transcripts.

He further alleges in the FIR that at this time, the startup’s operations were in “a state of disarray” particularly, on the engineering and technical front and the code of the application.

The chat messages show that KiranaKart had outsourced some of the development at this time.

Nanda further alleges neither of the two KiranaKart founders had the technical expertise to fix the problems but their arguments that he would be given substantial equity in the startup in addition to monetary benefits were enough to convince him.

Ansh Nanda is the son of DPIIT Joint Secretary Manmeet Kaur Nanda and Nikhil Nanda, managing director of NSE-listed JHS Svendgaard Laboratories Limited, which manufactures oral care products. The company has JVs with FMCG giant Patanjali for retail outlets, and is the manufacturer of the Aquawhite brand of dental care products.

In many of the messages sent by Ansh Nanda to Aadit Palicha, the former had hinted that his father had arranged meetings for KiranaKart with retail businesses including RP-Sanjiv Goenka Group-owned Nature’s Basket.

The Contentious ‘January 16’ Agreement 

Soon after Nanda’s entry into KiranaKart, in January 2021, the startup announced its $726K pre-seed round from Global Founders Capital, Contrary Capital, 2 AM Ventures and several angel investors. This was still before the eventual pivot to B2C and quick commerce in April 2021. But it was on the back of KiranaKart’s minds much earlier.

On January 9, 2021, Palicha said, “We are definitely going the dark store route. It’s the only way to make money in this space long term.”

As seen in WhatsApp chat transcripts accessed by Inc42, Palicha and Nanda are involved in discussions about hiring, what features to build in, how to integrate APIs from services such as AppsFlyer and others. At this point, the duo as well as Vohra were living and working from the registered address of KiranaKart in India, in Mumbai’s Andheri (East) suburb.

Between January and February, Nanda kept trying to broach the topic of discussing his potential cofounder status with KiranaKart’s investors. The messages show that Palicha was confident that Y Combinator would not in fact oppose bringing Nanda on board as a cofounder.

On January 11, 2021, Nanda texts Palicha saying he has signed a CIIAA or the confidential information agreement that employees typically sign with their workplaces. The terms of this agreement were not disclosed by Zepto.

In the FIR, Nanda further alleges he had created an informal agreement, dated January 16, 2021, which states he would earn up to 20% equity as a cofounder of KiranaKart if he continued with the company after March 10, 2021, which was the deadline for his college registration. However, if he chose to leave the company before March 10, 2021, he would be given just 4% equity for his work and a salary of $2500 per month.

Inc42 has seen a copy of this document, however, this is as informal a contract as they come. It might not even be considered a contract legally speaking since there were no parties to this document. But other photographs of the document show it was created on KiranaKart’s Google Workspace account by Ansh Nanda and shared with Aadit Palicha and Kaivalya Vohra on their official KiranaKart email accounts.

Between January and March 2021, Nanda claims that he was responsible for product development and the tech stack, and was also tasked with handling other responsibilities.

In the FIR, Nanda claims he wrote 99% of all code for KiranaKart’s consumer-facing app, the app for shopkeepers and the internal admin dashboard.

Besides this, Nanda says he also processed the salaries for some employees that he had brought on board. He also alleged that he was promised access to Bookface, the ultra-exclusive online community made up only of Y Combinator-backed founders.

Access to Bookface is tightly controlled. As per a Techcrunch story, when a company gets accepted into YC, the founders must sign investment documents, part of which are the Bookface forum guidelines under the founder ethics policy section.

In an exchange of messages late at night on January 15, 2021, the duo discuss Nanda’s options in regard to returning to his college if he does not continue at KiranaKart after March 2021. Palicha told him he is setting up a call with “Tim” on January 21 to discuss the terms of the document, according to the transcripts of WhatsApp messages that Inc42 has reviewed.

Further, in the FIR, Nanda claims that he sourced investment talks for Zepto from Peak State Ventures’ Jason Freedman, GoAhead Venture Capital, Sixth Sense Ventures. He alleges that GoAhead had agreed to invest $300K in the startup, but the deal fell through. He claims his name is mentioned as “key executive” in due diligence paperwork sent to GoAhead Ventures.

Nanda also claims to have been introduced to prospective investors as a cofounder in the company.

In particular, he alleges that Vohra and him held meetings with former WhatsApp business head Neeraj Arora, Venture Highway’s Samir Sood, where Nanda was introduced as a cofounder in the company.

Samir Sood and Neeraj Arora did not respond to questions about these meetings.

Given that it was an early-stage startup, Nanda said he was aware that he would have to do a lot of legwork on the operations side as well. He says the trio personally delivered several orders to customers due to a shortage of riders. This was corroborated by text messages between Palicha and Nanda, which we have reviewed.

On February 25, 2021, Palicha texted Nanda saying, “You are working as hard as we are — this is your company.”

Nanda also alleges that he was assured by Palicha and Vohra that they have received the consent from directors to name him as a cofounder.

Suvir Sujan And The Nexus Connection In Zepto

As the March 10 deadline drew closer, Nanda said he was spending out of his pocket for company expenses. He claims to have been told that this personal spending would be considered a share capital contribution towards his stake in the company.

But then things changed drastically. KiranaKart was approached by Nexus, one of the biggest early-stage investors in India.

With over $2 Bn in assets under management, Nexus is a heavyweight in the Indian startup ecosystem, and typically invests in seed and Series A rounds. It has a portfolio of over 100 startups around the world, including unicorns and publicly listed companies such as Druva, Hasura, MapmyIndia, Delhivery, Zomato, Unacademy, Postman, PubMatic and others.

The fact that Nexus was interested in KiranaKart was a sign that it had seen off the teething issues that startups typically grapple with. But it was Nexus’ entry that complicated everything for Nanda, as per the police complaint.

Firstly, he claims Nexus approached KiranaKart with an offer to acquire a 20% stake which would see the startup’s valuation grow by 3,000%. Nanda claims he met Nexus founder and MD Suvir Sujan in Mumbai, well before this round was announced in November 2021.

According to the FIR, Sujan confessed to Nanda that the VC’s investment in KiranaKart was only possible because Nanda had fixed the technical glitches that had bogged down the operations for months.

The startup was said to be clocking INR 14 Lakh in monthly revenue with 300 orders per day at this time.

In the FIR, Nanda claims that while Sujan was initially surprised by the offer of equity to Nanda, he did not seem opposed to the idea, given the quality and criticality of Nanda’s work.

But soon, this would change too. Nanda alleges that while Palicha, Vohra, the other directors and investors were seemingly happy with offering him equity at one point, this was off the table in a matter of weeks. Instead, they offered him a position of just an employee, he alleges.

Nexus Venture Partners’ Sujan is alleged to have said that while Nanda had done critical work for the startup, the investors could not allow him “to reap its benefits” as it would dilute the equity that they would get after investing.

The FIR also claims that Sujan said Nanda would be better off giving up his claim of a stake in KiranaKart, which would soon change its name and identity.

Nanda alleges that Sujan further stated that one has to be “brutal” when it comes to business, and claimed the decision to revoke the equity was cleared by the board and founders.

Inc42 could not independently verify the claims against Nexus or Sujan, and indeed, in its writ petition to quash the FIR and the Section 91 notices, the VC firm had stated that Nanda had not substantiated the allegations with documentary evidence.

The VC firm was represented by legal veterans including former union IT minister and Rajya Sabha member Kapil Sibal, and senior advocate Sidharth Luthra, who has represented the likes of WhatsApp as a defence attorney, and was even the public prosecutor in the Nirbhaya case.

However, the court, presided by Justice Yogesh Khanna, had refused to stay the investigation, even as it blocked coercive actions against Nexus and Zepto, which meant investigation officers could not get access to documents and other material from the companies.

The Threatening Calls And Blank Documents 

Soon after being rebuffed in his bid to get the equity, Nanda claims he returned to Delhi from Mumbai and then raised the issue with Palicha and Vohra. But the founders allegedly did not take this kindly, and tried to force Nanda into giving up the equity claim.

In his FIR, Nanda claimed that at this time, Zepto’s founders threatened him with dire consequences if he did not give up his claim of stake.

He was also allegedly told that Palicha and Vohra’s families have connections in the Dubai underworld, which would make life difficult for Nanda, should he choose to claim the stake, and that this would make it hard for Nanda to raise funds for any business in the future.

After this warning, Nanda claims he started receiving threatening phone calls from unknown numbers. These callers allegedly threatened Nanda and his family, including his sister of violence. In one such phone call, Nanda alleged the callers told him to sign documents left outside his home, without informing any authorities. The documents were a mix of blank pages and some text indicating that Nanda would be relinquishing his claim of a stake.

Inc42 could not independently verify the existence of these documents nor the threatening phone calls. But the messages between Palicha and Nanda made it clear that Nanda was deeply involved in the company’s day-to-day operations and was in many ways acting like Palicha’s EA as well, taking care of his meetings and appointments.

In April 2021, KiranaKart pivoted to Zepto and the quick commerce model through dark stores. Today, it is scaling up rapidly and expanding to new markets with each month. It must be noted that despite the name and model change, Zepto operates under the registered company KiranaKart.

It is noteworthy that Nanda filed an FIR (No 0151/2021) at Delhi’s Defence Colony police station on August 9, 2021, just a few months before Zepto raised another round of funding.

Among the accused named in the FIR are independent directors Shruti Shailraj Brahmbhatt and Manish Jain who were appointed as directors of Kiranakart Technologies Private Limited in December 2020. Jain is also director of Mumbai-headquartered Parasmani Roadlines, while Brahmbhatt has a profile on Facebook under the name ‘Shruti Palicha Brahmbhatt’, where she claims to be a partner at a design firm.

Soon after the FIR was filed, Palicha, Vohra, Nexus Venture Partners and Zepto director Jain moved courts. The accused in the FIR were represented by several lawyers including Aamir Khan, a junior partner at Lawmen & White (L&W); independent advocate Gautam Khazanchi, advocate Vaibhav Dubey; and advocate Pradyuman Kaistha, in addition to legal veterans Sibal and Luthra.

Ansh Nanda was represented by senior advocate Vikas Pahwa, Manu Sharma, Anandrana Handa Wadhwa, Anushree Malaviya among other lawyers.

In one of the petitions filed by Manish Jain, his counsel argued that the Superintendent of Delhi Police remove the Investigating Officer, SI Sanjeev Kumar, from the investigation “for acting in transgression of his powers and duties and appoint an impartial investigating officer.”

Incidentally, SI Kumar has been transferred out of the particular station. Inc42 visited the Defence Colony Police Station to speak to SI Kumar, but we were informed that he has been transferred from that station. SI Kumar declined to speak to us for this story.

A Quick and Mysterious Settlement

Despite the seriousness of the allegations, by late November, all parties involved in the case had seemingly come to a settlement, just three months after the FIR was filed. Delhi High Court documents show that Ansh Nanda’s father Nikhil Nanda appeared in virtual court on November 29, 2021 as the power of attorney and stated that an agreement had been reached.

At least three sources close to the Nandas confirmed the resolution, but we were told that no stake was provided in exchange for this settlement.

Why the Nandas settled the matter in a few months is a mystery at this moment, given that we were not able to independently verify the terms of the agreement. Nikhil Nanda did not respond to our questions.

Responding to the allegations, Zepto cofounder Aadit Palicha said that the matter was settled after the Nandas approached the company, wary of losing the case due to lack of evidence. The final settlement was very “favourable” for Zepto, he claimed, without elaborating on the amount.

Palicha said that the courts did not pass a single favourable order to support Nanda’s claims, and the FIR was close to being quashed. Anticipating this fate, the Nandas approached KiranaKart for a settlement instead, he claimed.

He added that this was just another instance like extortion or harassment cases involving startup equity in the past, without naming any particular cases.

However, sources close to the Nanda family have disputed these chain of events. One source on the Nanda legal team told us on the condition of anonymity that even if petitions for quashing the FIR were accepted by the court, the Nandas would have had time to file a counter-appeal and the cases were at a very early stage.

Indeed, there’s no indication from court orders or filings that the case was close to a conclusion or that the petition had been granted. From the documents available in relation to these cases, the only clear order came on November 10, 2021, when the court said that the investigation will carry on, even as it asked the special investigator to “hold his hands” in relation to the notice under Section 91.

But then a settlement was reached before November 29 and brought to the court.

It must be noted that the settlement was brought to the court and accepted on November 29, 2021 and Zepto then announced its second major funding round of $100 Mn on December 21, 2021.

Ansh Nanda is now a cofounder of Un1feed, a social media aggregator and his LinkedIn profile places him in the San Francisco Bay Area. He did not speak to Inc42 for this story.

Zepto’s Aadit Palicha clarified that this particular case is one of the first things the company tells potential investors when deal talks have progressed to an advanced stage. He also claims there’s nothing for the company to hide here, but the circumstances around the settlement are less than clear.

Even though the case is claimed to have been settled, the question is why did Zepto pay up for something it claims never happened. If no equity was promised to Ansh Nanda, why did the company not proceed with its legal challenge against such a claim?

From messages sent by Aadit Palicha, it’s clear that he thought Ansh Nanda was doing critical work for the company, so was it a question of Palicha and Vohra being swayed by investors? If Palicha was on-board with the idea at one point as the messages point out, why did things change?

Of course, a lot of startups have brought cofounders on board later in their journey—that’s not a new phenomenon. It could be a case of Nanda not being competent as a founder, but it’s still a question of entrepreneurial ethics and setting the right example for future equity holders.

Another Nexus Founder, Another FIR: But Where’s The Due Diligence?

Incidentally, Zepto is the third Nexus-backed startup that we are aware of where one of the founders has been named in FIRs for one reason or the other. Nexus Venture Partners did not respond to our questions about its due diligence process in its recent investments.

The same was seen in the case of Onsurity and YoloBus, which was acquired by publicly-listed EaseMyTrip, a deal that is still subject to closing conditions.

In May 2020, Amazon-backed insurance tech unicorn Acko filed an FIR in Bengaluru alleging that two former employees Yogesh Agarwal and Kulin Shah colluded and stole the company’s confidential data to create Onsurity, a rival insurance tech startup. In September, the Karnataka High Court dismissed a petition from Agarwal and Shah seeking the quashing of the criminal case against them. The status of the case is unclear since this dismissal.

In the case of YoloBus, there were data theft allegations against founder Shailesh Gupta before the company was founded. Before YoloBus, Gupta was CEO of OYO-acquired Innov8 Coworking. The FIR lodged against Gupta was for online theft and impersonation. It’s not clear if any further action was taken against him.

In both the cases, these FIRs were filed much before Nexus invested in them.

And now, a third Nexus portfolio company has been caught in a similar situation. And this time, the VC firm itself is in the thick of things, with its founder also accused.

Once again, a prominent Indian investor has to answer tough questions about due diligence and the role of VCs in shaping the ecosystem and young startups.

While these allegations might take some of the shine off from Zepto, it doesn’t diminish the scale that the company has reached. In addition to Delhi NCR, Bengaluru and Mumbai, it has also built presence in Hyderabad, Pune and Kolkata. These are all markets with large tech adoption and that’s been Zepto’s focus over the past year after its pivot from KiranaKart.

The Zepto Episode & The State Of Indian Startups

As more and more students and young Indians join the entrepreneurial race, the Zepto incident and the slew of allegations are another reminder of the power dynamics between investors and how young or aspiring founders may get caught up in this grind.

With billions of dollars at stake, it’s not unsurprising that this is a brutal cut-throat world, where some people stand to gain a lot at the expense of others. We have seen tussles and legal battles for stakes even in late-stage companies such as Paytm, which faced a similar challenge ahead of its IPO last year. So it’s perhaps not unexpected that smaller companies also get embroiled in such incidents.

One might argue that private companies are private for a reason, and that they don’t need to make disclosures of such conflicts or settlements in their books, but it’s also important to remember that situations can escalate into public disputes like the case of BharatPe. It’s critical to address these challenges early.

As the Indian startup ecosystem expands and as even early-stage startups attract millions in investments, the dynamics and relationships between founders and investors are changing. The startup opportunity has ushered in a new breed of investor — from Bollywood stars, to cricketers and traditional business owners — which makes access to funds easier but also makes it tricky for founders to navigate the waters.

Given this, the role of veteran investors and those embedded in the system is not just providing funds or mere due diligence, but also guiding young founders in the right direction as entrepreneurs and employers, taking the right decisions about equity dilution and fostering a portfolio that cares about culture.

With Zepto expected to join the unicorn club with its next funding round, it’s one step away from having a constant spotlight on its actions and its past. As it sets off on the unicorn journey in such a short time, the startup will in all likelihood become a beacon of inspiration for other young founders and entrepreneurs — and as all role models, it needs to set the right example for the Zeptos that will inevitably follow.

Corrections

• April 01, 2022; 11 am
  An earlier version of this story said that Nanda met KiranaKart founders in November 2021. We have changed this to the correct date i.e November 2020.
• April 01, 2022; 12:30 pm
  Replaced the infographic for Zepto’s shareholders due to misplaced names

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.