What Next For BharatPe? 


The clash of personalities and lack of long-time leaders has left BharatPe in some trouble. 

If 2022 taught us a lesson, it’s that everything can come undone and seemingly large startups that bloomed out of nowhere can just as soon crumble.

Just ask fintech unicorn BharatPe valued at close to $3 Bn.

One would have thought that 12 months after the Ashneer Grover controversy, the company would be able to move on. But the ebbing tide of 2022 has dropped all boats equally, and the leadership crisis – even though the company denies it — has rocked the BharatPe ship.

While a new year typically brings some optimism as it signals a new start, 2023 it seems is not going to be easy by any stretch. We look at how the clash of personalities and lack of long-time leaders has left BharatPe in some trouble. But after these two important stories from our stable this week:

BharatPe’s New Guard

Ashneer Grover, Bhavik Koladiya and Suhail Sameer are out of the BharatPe frame — willingly and unwillingly — so the new BharatPe will be led by Nalin Negi and Rajnish Kumar. The only one from the old guard is Shashvat Nakrani, who is now the ‘founder’ of the company.

But in the public limelight, BharatPe is still associated with Grover despite his departure, and Nakrani has preferred to stay out of it. In his tweet reacting to the change in CEO this week, Grover even wondered why Nakrani did not take over as CEO.

As the company raised more funds and looked to scale up after Grover had led it through the first three years, Sameer was brought on board and just after 16 months, he walked away or was asked to. These chain of events suggest a shaky base for the business and the losses don’t help in changing that image.

BharatPe Promise Fades

The cult of a founder can often be a recipe for success in the initial days, but nothing replaces fundamentals. One person cannot carry the company after a certain scale and that’s why at later stages, the team becomes critical, according to a Bengaluru-based early-stage investor.

In the case of BharatPe, the company had a group of key leaders that departed one after the other, leaving the responsibilities with newer employees. This may work for a company that has reached a certain scale of revenue while sustaining profits, but in the case of startups, this is akin to running a new company altogether.

Since 2021, three CXOs at BharatPe have quit besides two founding members, a cofounder and key business heads. This at a time when the company got a small finance banking licence.

The Unity SFB was seen as a major coup for the Indian fintech ecosystem against legacy banks, but that promise has clearly not proven attractive enough to retain key employees. Plus the lack of clarity at the founder level has also contributed to the exodus. .

Heavy Losses In A Tough Market

According to a BharatPe spokesperson, In FY22, BharatPe’s revenue grew 169% to INR 321 Cr from previous year’s INR 119 Cr, driven by the payments volumes on PoS and lending referrals.

“While our total loss for FY22 is INR 5594 Cr, it includes an extraordinary item pertaining to loss in change in fair value of compulsory convertible preference shares amounting to INR 4782 Cr. This is not an operating loss but only a change in the fair value and excluding this the operating loss is INR 811 Cr. This item is one-off and shall not be there from next year as we have now reclassified the compulsory convertible preference shares from liability to equity,” the company told Inc42 in a statement.

The change in fair value of preference shares allotted to investors raises more questions on the actual valuation of the company — more on this later — but even accounting for this explanation, the losses grew from INR 270 Cr to INR 811 Cr.

That’s a massive 3X surge in losses as of March 2022 just before the worst part of the year in terms of layoffs and cutbacks began.

Questions On Valuation 

So now coming to the valuation and the change in fair value of shares. Essentially, this means that the equity purchased by investors was given to them at a discount. Typically this happens when there are clauses in the term sheet related to performance or profitability benchmarks.

Any negative change here indicates that the company did not meet its projections or commitments to investors and therefore had to take an on-book loss. The fact that this was reported for FY22 means the period analysed was likely between April 2021 and March 2022.

Incidentally, this coincides with Suhail Sameer taking over as CEO in August 2021. So is the change in fair value attributable to commitments made by former CEO Ashneer Grover before Sameer came into the picture?

What Can BharatPe Count On?

BharatPe’s trump card remains Unity SFB and the banking licence it has got through the JV with Centrum Financial Services. This will remain key for the company to acquire capital at low costs compared to other startups and disburse loans faster.

However, the hike in central bank interest rates, the unpredictability of the dollar, rising inflation and recession fears will particularly impact the priority sector, which needs to be a key focus area for Unity SFB as per RBI regulations. According to ICRA, Unity’s “ability to scale up its operations while maintaining a healthy asset quality would remain critical from a credit perspective.”

As of September 2022, Unity SFB’s gross loan book stood at INR 6,768 Cr, compared to INR 5,996 Cr in March, with microfinance loans (inclusive banking) forming 29% of this book. But it is expected to report losses over the medium term, given its high operating expenses, costs due to merger with PMC Bank, and incremental credit costs. The bank reported a net loss of INR 99 Cr in H1 FY23 compared to INR 150 Cr in H2 FY22.

But that’s Unity. What about BharatPe and its base of millions of merchants, QR Codes, PoS products, BNPL products, peer-to-peer lending and gold loans? Will the company be able to attract a CEO that can turn around the INR 800 Cr+ losses incurred in FY22?

There are some serious existential questions for the fintech unicorn and it needs to answer them swiftly given that there will be little respite in 2023.

We have more coming later this week on BharatPe, its products as well as the Unity SFB situation. Stay tuned for that.

Sunday Roundup: Startup Funding, Stock Markets & More


  • Indian Giants Take On PDP: Airtel, Jio and Paytm are among the companies opposing the clause in the Personal Data Protection Bill that allows transfer of personal data to ‘trusted geographies’ outside India
  • EV Boom: India saw a million electric vehicles registered in 2022, up 300% from 3.2 Lakh units in 2021, which is undoubtedly a major milestone in EV adoption
  • 2022’s 30 Startups To Watch: Our annual wrap-up of the much-celebrated monthly series. These are the early-stage startups that stood out in 2022 because of their agility and adaptability in a tough year

We’ll be back next Sunday with more insights and a roundup of the top stories from the world of Indian startups. Till then follow us on Instagram, Twitter and LinkedIn to get the latest news as it happens


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