Zilingo’s Collapse: Inside Ankiti Bose’s Multimillion-Dollar Implosion

Building a startup is walking the fine line between courage and hubris, and for years Zilingo’s Ankiti Bose showed the world that she could. Till she finally slipped towards hubris, and crashed.

From a Southeast Asian and Indian startup success story to allegations of fraud and revenue inflation, a social media war and finally liquidation — when we look at the Zilingo story through this montage, it might seem like Zilingo’s demise is just like thousands of other startups before it.

But after months of investigation and information received from dozens of sources close to Zilingo, it would seem that Ankiti Bose was at the centre of everything that went wrong for the once-celebrated startup.

Inc42 has been able to unearth more details about the company’s messy financial reporting as well as alarming information about over $10 Mn in unexplained payments and more, with Bose allegedly being in the thick of it.

• More than $9 Mn paid to Sandeep Kapoor’s Algo Legal and related entities as legal fees and allegedly for “IT system development”, approved by Bose
• Allegedly submitted conflicting revenue and GMV figures to shareholders and board members in FY21 and FY22
• Revenue adjustment from enterprise to long-tail vertical to the tune of $26 Mn, few days before the end of FY22 on alleged to be on Bose’s recommendation
• An alleged 10X salary hike without board approval for the former CEO, and similar pay raises for CTO and COO
• A wave of allegations around harassment on social media from anonymous accounts and “witch-hunt by the board” which have not yet been proven

In the era of Elizabeth Holmes, Sam Bankman-Fried, Charlie Javice and other tarnished founders, this is the Ankiti Bose and Zilingo story.

Zilingo’s Downfall 

A year is a long time in tech, but not if you are looking for the answer to the question: what happened to Zilingo? Exactly a year after controversy brought down Zilingo, and its high-flying cofounder and former CEO Bose, we still don’t have the full picture.

In short, the company lost steam as Bose looked to show growth at all costs and even made some dubious payments, as we will see. Besides this, the company misreported revenue to various shareholders and board members, misrepresenting its growth, which was finally brought to the attention of the board by whistleblowers in the company.

Bose’s subsequent dismissal from the company in April last year kicked off a social media storm. Even as investigations into alleged malpractices were going on, allegations of harassment were raised by Bose against many in the company as well as claims of malpractices, misconduct, breach of fiduciary duties and malfeasance.

Bose has thus far never presented any direct proof to support these claims, and speaking to Inc42 via a spokesperson she denied having any knowledge of financial discrepancies or unexplained payments to vendors.

Sources told us, she not only signed off on many of these payments, but was also said to be involved in showing disparate revenue figures to investors and shareholders between 2020 and late 2021.

More than a dozen of Zilingo’s key employees revealed these details to auditors from Kroll and Deloitte, and much of this information is likely to be in the reports produced by the two auditors appointed in the wake of Bose’s dismissal.

While publicly Bose has maintained that her termination was wrongful and claimed that she was removed from her position for “insubordination”, we have learnt that there were more than seven reasons put forward by the board of directors in their notice of termination.

The former CEO also alleged that she was fired for not cooperating with the probe rather than for actual financial improprieties. In response to Inc42’s questions about these payments and financial irregularities, Bose laid the blame on other executives at Zilingo including cofounder Dhruv Kapoor.

“Ms Bose’s silence has been misconstrued as a weakness and a pile of rubbish allegations have been thrown at her because “unnamed sources” with one sided narratives and half-baked information have been given way too much importance without proper evidence.”

The curious wording is because the former CEO replied to our questions through a spokesperson, which is typically how a company responds to questions. Given that Ankiti Bose is an individual, the responses from her ‘spokesperson’ have been considered as direct replies from Bose.

Editor’s Note: In the interest of brevity and clarity, Inc42 has edited some of the responses received from Ankiti Bose. Her full responses have been embedded below verbatim and with no edits. 

Investors Unanimous On Sacking

Inc42 was not shown a copy of the Kroll and Deloitte audit reports into Zilingo or its shareholders, despite requests to the company, which engaged the auditors to look into the books and Bose’s allegations respectively.

But as per our investigation, it’s clear that there were more than a few discrepancies in Zilingo’s books, something pointed out by one of the company’s shareholders as well.

Burda Principal Investments, one of Zilingo’s key backers in its funding rounds in 2018 and 2019 told Inc42 in a statement, “In the time of the Corona pandemic, Zilingo’s business has come under extreme pressure and was re-focusing from B2C business to B2B. In addition, significant irregularities in reporting to investors also contributed to the company’s failure.”

Burda’s statement further adds that the findings of the Kroll report directly contributed to the termination and that investors are still mulling legal action.

“Kroll Inc. was jointly hired by the main investors to examine this case and the investigations on financial irregularities have been completed. As the investors are still considering options for legal action, please understand that we cannot comment on any details from the report or share any further information at the moment,” said Burda in a statement to Inc42.

It’s interesting to note here that Burda says that Kroll was hired by “the main investors” for the probe. Contrary to Bose’s claims of a witch-hunt by specific investors on the Zilingo captable, we were also told there was no disagreement within the board of directors as to Bose’s suspension.

“Sequoia’s stature meant it was an easy target for Ankiti Bose in her social media battle. They grabbed the headlines, but other investors such as Temasek, Sofina, Burda Principal Investments and Koru Investments also backed the decision to remove her [Ankiti Bose]. This was not a case of one investor pulling the strings,” said one of the sources close to Zilingo.

It’s also interesting to note that Ankiti began her career at Mckinsey in 2012 and then worked at Sequoia as an investment advisor between 2013 and 2015 before Zilingo.

While Sequoia is the largest institutional shareholder in Zilingo, the board of directors, which includes representatives from Burda, Sofina, Temasek and Koru among others since last year are said to have been in agreement over the action.

Burda’s statement above is in line with what Temasek said last April after Bose’s suspension In a strongly-worded statement, Temasek had said it was “in support of the board’s investigation into the complaint as a part of good governance to safeguard the interests of the company.”

Despite these statements, Bose continues to maintain that only ‘one investor’ was responsible for the investigation and her dismissal.

“There was an appalling lack of transparency and failure to follow due process in the instigation of a malicious witch-hunt by the Zilingo board against Ms Bose. This witch-hunt involved the appointment of Kroll, supposedly by the company but in reality, based on documents sighted by Ms Bose’s legal representatives – this was commissioned by one single investor,” Bose’s spokesperson told Inc42.

Given that Sequoia has backed Zilingo since its seed round in 2015, the VC has also been at the centre of the controversy, with many questions around the lack of due diligence, as well as the involvement of Sequoia’s former general counsel Sandeep Kapoor and his law firm Algo Legal.

The $10 Mn Zilingo-Algo Legal Connection

It was in the last two days of FY22 that Zilingo’s story unravelled. According to our sources, whistleblowers approached the board on March 30, 2022, revealing a series of payments approved by Bose to various companies that did not seem to have any explanation or relation to Zilingo’s operations.

In a meeting the next day, Bose was said to have been presented with these allegations and suspended from her position.

The whistleblowers revealed that not only was the company paying other tech companies significant amounts, but there were also payments made to Algo Legal to the tune of $7 Mn. Algo Legal is the law firm founded by former Sequoia Capital India general counsel Sandeep Kapoor in August 2019.

Besides Algo Legal, Zilingo also made payments of $944K to EbixCash, the Indian entity of Nasdaq-listed financial services co Ebix between August and September 2021. Further, over $2.3 Mn was transferred between Zilingo’s India and Singapore entities to OneDelta Technology Solutions Private Limited between April 2020 and November 2021.

The other companies that received mysterious payments from Zilingo included Samvid Legal and Quant Legaltech, both of which are related to Algo Legal. Indeed, OneDelta Technology Solutions also has an Algo Legal connection, given that its filings with the Ministry of Corporate Affairs show “[email protected]” as the official contact person.

Essentially, Algo Legal has received over $9 Mn in payments from Zilingo over the course of April 2020 to November 2021. As per information revealed by up to three sources close to the company and former employees, Bose had approved all of these payments in exchange for a slew of services from EbixCash and OneDelta.

“When the likes of Kroll find these discrepancies, it’s clear that the termination was for cause. It was not just because of insubordination, but persistent neglect and refusal by Ankiti to follow the rules and regulations and decisions that were materially against the interest of the company,” one of the sources told Inc42.

A certain Muraleedharan Nair is the director connecting Algo Legal to OneDelta and other entities on Zilingo’s books when it comes to these mysterious payments. Nair and Sandeep Kapoor are also directors at Spurgrowth Ventures LLP, which claims to be operating as investment managers, asset managers, portfolio managers, sponsors, advisors, and financial and management consultants.

Questions emailed to Sandeep Kapoor did not elicit a response till the time of publication.

 

Here it must be noted that Ankiti Bose has said that she has not seen the Kroll report directly. “Despite multiple requests as an affected party, as a shareholder and a board member to have visibility on the contents of this report, Ms Bose has yet to this day sight this report,” her response said.

But sources close to the development added that this is a deliberate decision given that there could be further legal action taken against the ousted CEO, in which case, these reports would be made part of the legal discovery process.

Indeed, Burda’s statement to Inc42 above indicates that shareholders are likely to take legal action against Bose in the future.

Thus far, the reason for the payments of over $10 Mn has been unknown, but sources revealed to us just why these massive outlays raised red flags.

For instance, the $944K paid to EbixCash was said to be for the development of a ‘parallel IT system’, despite Zilingo having an in-house tech and product team.

The contract for the EbixCash deal was signed in September 2021, but the official documentation has been backdated to April 2021. Zilingo paid EbixCash close to $630K. Essentially, Bose had approved payments to a vendor even without an existing contract.

When it comes to OneDelta, the situation is even murkier. OneDelta was paid a total of $2.3 Mn for testing, quality control and maintenance of the so-called parallel technology platforms. However, OneDelta was being paid well before EbixCash even appeared on the books of Zilingo.

As per sources who have seen emails between Bose and these vendors, the Zilingo finance team was allegedly told to process these payments by Bose. Many of the invoices raised by Algo, OneDelta and EbixCash were allegedly paid off in a matter of days by Zilingo’s finance department.

One cannot overlook the Algo connection in these multiple transactions. Incidentally, the law firm and its founder Kapoor were drawn into a controversy involving Sequoia last year for allegedly asking some companies for payments in exchange for protection against legal and tax probes.

Following these reports, the former general counsel for Sequoia India sued the VC firm and some of its managing partners, but the case has since been withdrawn.

Nevertheless, in response to the reported allegations about Algo Legal, Sequoia told some founders in its portfolio not to use the firm’s services. It must be noted that the law firm has advised a number of transactions for Sequoia as well as marquee VCs such as Tiger Global since inception.

Further, Zilingo’s costs for Kapoor’s secondment fees — paid to external counsels for assuming the role of a general counsel temporarily — more than doubled, as per sources privy to the finances of the company.

These have brought up more questions for Ankiti Bose to answer.

In her responses to Inc42, Bose alleges through her ‘spokesperson’ that she contracted these vendors after a “huge fallout” with CTO and cofounder Dhruv Kapoor. She claimed Kapoor’s “performance issues and alleged moral depravity” were the reasons she brought on third-party vendors for development of tech platforms.

Incidentally, even as she claims this now, last year she had looked to team up with Dhruv Kapoor for a supposed management buyout offer. Besides, Bose spoke warmly about Kapoor and Aadi Vaidya in an Instagram post in September 2021, just months before the brouhaha broke out at the company.

This is just one example of the wildly contradictory claims from Bose soon after everything went so wrong for her startup.

Wading Through Ankiti Bose’s Contradictions 

“All payments at Zilingo, all USD 300Mn, not just the 2Mn [to OneDelta] required Ms Bose’s final approval as a process. They were processed by the finance team.” — Ankiti Bose, through her spokesperson

As we poured through the many media statements from Bose’s camp and her lengthy responses to our questions, we could find many contradictions in everything the former CEO has said since last year.

For instance, despite stating the above sentence multiple times in her responses to Inc42, Bose also then alleged that cofounder Dhruv Kapoor was able to take loans without anyone’s approval from the company.

In another example, Bose had reportedly sent a legal notice to the Zilingo board claiming that she believes her termination is a result of her “non-compliance with the narrative” that Algo Legal was extorting some of Sequoia’s portfolio companies.

However, in notices sent to other publications by Bose’s counsels Providence Law and shared by Bose with Inc42, the former CEO claimed she had cut ties with Algo Legal in late 2021 on Sequoia’s recommendation.

Further, while Bose also told Inc42 that she was not given adequate time or access to documents to explain the payments to OneDelta and other companies, her responses also reveal the timeline of her engagement with Kroll. She claims the auditor was uncooperative, however, this timeline also indicates that she had more than a month to clear her name of any wrongdoing.

For instance, Bose has alleged mental harassment while being questioned by Kroll on several occasions. This contradicts her claim that she was not given enough time to explain her decisions to the auditor.

Sources who have tracked the investigation closely told us that the day after the whistleblowers stepped forward, key investors and advisors of Zilingo had a lengthy meeting with Ankiti Bose. Besides Sequoia’s Shailendra Singh, representatives of Sofina, Burda and Koru were present at this emergency meeting, which is said to have taken place on March 31, 2022 outside the Zilingo offices.

Bose was suspended immediately after this confidential meeting, when she was informed that whistleblowers had alleged irregularities linked to her role in the company. Incidentally, partial recordings of this classified meeting were leaked on social media soon after Bose’s suspension, which led to a different kind of battle on social media, as we will outline later.

Further, we have been informed by multiple sources that, on May 04, 2022, she is said to have spent 10 hours in a single session with Kroll during the course of its audit into the financials. This was more than a month after her suspension from Zilingo.

Salary Bumps And Accounting Gymnastics

Besides those unexplained payments to vendors, Zilingo’s books had plenty of other anomalies and some creative accounting measures approved/undertaken by Bose to boost the revenue reported in FY21 and FY22.

Some of these measures were taken merely days before her suspension. For instance, we were told that between March 18 and 20, 2022, Bose had asked the finance team to transfer $26 Mn of the GMV or topline revenue from the enterprise business to the longtail business, resulting in operational revenue growing from $22 Mn to $48 Mn.

To be clear, Zilingo’s longtail business involved organising the many disparate and small vendors of fashion accessories and material with smaller brands, while the enterprise business was about connecting larger suppliers with retail brands. While the former is a volume-centric play, the enterprise business accounted for Zilingo’s largest customers by revenue.

It’s not clear how this change in GMV headers resulted in higher overall revenue for Zilingo. Without a look at the audited financials of the company, it’s hard to ascertain just how much revenue it earned in FY22 or indeed in FY21.

What cannot be denied is that Ankiti Bose gave herself — as well as cofounder Kapoor and chief operating officer Aadi Vaidya — a major pay bump between 2017 and 2019. Her salary grew from roughly SGD 5.5K in 2017 to SGD 58.9K (more than 10X) in 2019. Kapoor saw a pay bump of roughly 3X during this time, while Vaidya was given a 7X hike over the two years.

In response to our questions about these pay hikes, Bose’s representative said, “There was no 10X growth in CEO salary — in fact Ms. Bose was on a 30% pay cut as earlier clarified and proper documentation exists with the company for this. In fact there was a large growth in the CTO salary of Mr. Dhruv Kapoor who not only took a salary in India but also in Singapore which he did with no consent from investors.”

She added, “Mr. Vaidya’s salary has actually increased the highest as he received an 8X salary increase and was granted almost $20 Mn+ of stock options — NEARLY ALL FULLY VESTED — as opposed to the measly numbers before.”

Curiously, these pay hikes were not taken to the board for approval as is typical practice for CEO pay changes. Sources claim investigators were not given any explanations for these pay hikes for the top execs.

Sources also told us that investors were given different versions of the accounts and financial statements by Zilingo in the MIS. Discrepancies to the tune of $50 Mn, for instance, were flagged between April 2021 and December 2021 (FY22) between the GMV in MIS reports and the audited financials.

Former employees at the company’s Singapore HQ also told us that Kroll investigators found three sets of revenue numbers for FY21 — $190 Mn, $164 Mn and $140 Mn — which were sent to shareholders. But in other books, the net revenue for FY21 was found to be about $40 Mn.

Sources claimed to have seen multiple emails sent by Bose to finance teams in relation to the changes in the revenue recognition.

But showing growth at all costs has been a common pattern among VC-funded startups that are looking to grow into their valuations. In our previous investigation into the company, we saw how Zilingo stretched itself thin in light of problems in its business model. The downfall of GoMechanic thanks to accounting shenanigans is a prime example, and this was pretty much the case for Zilingo too.

Social Media War 

In response to her dismissal, Bose said she would fight back legally, but while there were no official statements, her tussle with investors and Sequoia in particular spread to social media like wildfire.

As per Inc42’s research, backed by other analysis earlier, the weeks following Bose’s suspension saw over 2,000 tweets in her defence, with many blaming Sequoia using the hashtags #SequoiaLeakedTapes and #SexistSequoia. Some tweets also targeting Burda Principal Investments, another key investor in Zilingo.

The allegations of sexual harassment raised by Bose in the immediate aftermath of her dismissal also gained credence on social media, with tweets about these claims targeting Dhruv Kapoor and Aadi Vaidya for their alleged inaction.

“The claims of any personal relationship or personal fallout between Shailendra [Singh] and Ankiti are completely baseless and have no merit whatsoever. This seems to fall into a larger pattern of targeting people once the wrongdoing was called out,” added one of the sources.

While Inc42 did see tweets and posts targeting Bose, the volume of pro-Ankiti posts was significantly more. Many of the tweets also included references to classified details and meetings, such as a brief recording of the initial meeting where Bose was suspended.

Many of the tweets in the latter camp were similarly phrased and several had common spelling errors that raised suspicions of a smear campaign. Zilingo also spoke out and said the “paid and defamatory social media campaign” had caused many employees to question their place in the company and created panic.

Ankiti Bose also claims she was continuously harassed on social media with multiple threats of a violent nature against her since the time the controversy broke out. However, Inc42 could not independently verify these allegations as Bose did not present any URLs containing these alleged threats.

Will Ankiti Bose Keep Up The Fight? 

Ultimately, the social media campaign only served to distance the board and the company from Ankiti Bose, according to some of the shareholders that Inc42 spoke to.

And the company was sent into a protracted battle for survival. One shareholder told Inc42, “There’s a feeling among the shareholder group that we could have saved Zilingo if it hadn’t been for the media battle. That spooked everyone, including potential acquirers and debtholders and that’s not a good sign for any company.”

Speaking to Inc42, many of Zilingo’s employees claimed they worked in a high-pressure environment and feared repercussions from Bose, even in the best of times. As business decisions went awry, the atmosphere in the company turned nastier, with the threat of dismissal dangling on their head. Many of our sources labelled her style dictatorial in their conversations.

Bose denied these allegations in her typical combative style. “It is striking that phrases being attributed to Ms Bose’s management style are seldom, if ever used to describe male startup founders in being a young driven, female leader with a strong vision for herself and her company’s future. Ms Bose was willing to hold herself and therefore her colleagues to the highest of standards. Ms Bose has done absolutely nothing wrong and is sick and tired of being torn down by malicious propaganda.”

It’s been the age of bad founders since early last year. The high-profile cases of Theranos’ Elizabeth Holmes, FTX’s Sam Bankman-Fried and Frank’s Charlie Javice all point to the rot in Silicon Valley, and then there was the $1 Bn Outcome Health scandal, where the company’s former Rishi Shah and former president Shradha Agarwal have been convicted.

The Zilingo and Ankiti Bose situation have taken the Indian startup ecosystem to this unenviable club in many ways.

That is not the company any entrepreneur wants for themselves in 2023. Though Bose’s case has not hit the courts like Holmes or SBF, the Zilingo saga has scarred her image.

Several Indian founders have been questioned for their lack of integrity in the past 15 months. The BharatPe-Ashneer Grover case, the GoMechanic fraud and the mismanagement at the likes of Trell, Bikayi and others are other recent examples of the missteps by Indian founders. Bose is not alone, but the fact is Zilingo did not survive her fall from grace. Most of the value created by the company has been eroded after the liquidation.

Zilingo’s tech assets were bought over by Swiss company Buyogo post the liquidation, but sources told us there’s nothing to be recovered from the India business.

Of course, there’s no telling what could have happened to Zilingo had things not turned ugly between Ankiti Bose, the other cofounder Dhruv Kapoor and the board. We asked Bose why she is yet to file a lawsuit against any of Zilingo’s shareholders or board members despite alleging harassment and wrongful termination.

Her response reproduced verbatim, “We think the question to ask is instead how she has managed to keep herself together in the face of brutal paid media and social media barrage, threats of mental and physical harm, threats of rape.

This is not to say she has precluded any avenues of legal recourse but the past few months have been a period of tremendous trauma and turmoil amidst all the maliciousness directed at her. Even when the men in tech are morally depraved, somehow the women are paying the price of it. But again, watch this space for more. Ms Bose has chosen to speak up now so this will not be the last you hear of her.”

Despite the host of contradictions in Ankiti Bose’s other claims in the past year, we have no doubts about that last line.

Ankiti Bose’s Full Response Follows

Update Note | April 22, 2023; 00:15 AM

• Portions of this article have been edited after publishing for clarity and accuracy

Correction Note | April 24, 2023; 11:00 AM

• We have updated the graphic showing Algo Legal’s company network to remove entities such as Varun K & Associates which are not directly related to Sandeep Kapoor, and only served as advisors for certain transactions.