Housing.com, which was once considered as one of the leaders in the online real estate space in its early years, now operates under the shadow of the online real estate platform PropTiger.
By Salman SH
Tussle between founders and investors who are also part of the board are not new in the start-up space, with the latter having an upper hand in most such slugfests.
If the BharatPe versus Ashneer Grover tale is taken as the latest case in this ongoing saga, it is quite reminiscent of the Housing.com incident in 2015 which eventually resulted in the well-funded prop-tech brand going belly-up post the tussle between Rahul Yadav and the board. Housing.com, which was once considered as one of the leaders in the online real estate space in its early years, now operates under the shadow of the online real estate platform PropTiger, which ended up acquiring the former in a distress deal in January 2017.
Although there aren’t many similarities between the ousting of co-founder Rahul Yadav of Housing.com and Grover’s resignation from the company, the key issue with both instances points towards shaky governance at high-growth tech start-ups. However, in both BharatPe and Housing.com, the founder-investor relationship appeared strained much before both parties took to media to propagate their viewpoints.
BharatPe, which was founded in early 2018 by Grover, Bhavik Koladiya, Shashvat Nakrani started off as a mobile app, that carpet-bombed itself into one of the leading players in the person-to-merchant (P2M) payment space. Its growth parallels that of Paytm and Flipkart-owned PhonePe using a go-to-market strategy that is still considered by industry watchers as one of the most successful disruptions in mobile payments.
Last month, fearing a mass exodus of employees, current BharatPe CEO Suhail Sameer, penned down an email to employees reassuring them that the board battle wouldn’t hurt day-to-day operations. Sameer, who has vast experience in the FMCG, technology, and investing space was originally hired as group president in August 2020. It’s unclear whether the board played a role in his appointment, but, exactly a year later in August 2021, Sameer was named the CEO, replacing Grover.
Although Grover seemed to have agreed to step down from his role as CEO of his own company, in the case of Housing.com, Yadav was embroiled in a long war of words before being disgraced and removed from his position by the board itself. Yadav was also accused of displaying a problematic behavioural pattern on social media and public, similar to what the allegation levelled against BharatPe’s co-founder Grover.
Eventually, the Housing.com board sought a merger with its rival PropTiger which saved the company from a full-blown shutdown. The co-founders of Housing, namely Yadav and Ravish Naresh and others eventually ended up in successful stints. Yadav went on to build his own start-up but later joined real estate firm ANAROCK as CTO, while Naresh co-founded Khatabook, which is now one of the fastest-growing retail technology start-ups.
Also, in the notable case of Uber co-founder Travis Kalanick, who was ousted from his role as CEO for prorogating toxic work culture; eventually ended up raising millions of dollars in VC funding for his cloud kitchens venture. Kalanick’s infamous email to employees in 2013 which was leaked to the press at height of his controversy depicted him as a founder lacking maturity, and many experts certified even his downfall. But they were proved wrong.
However, in the case of the BharatPe saga, Grover and his wife were accused of swindling private company funds for personal use. The alleged details of how Grover and his wife Madhuri managed to accomplish this was already drawn out by third-party auditors. The BharatPe board is now set to meet once more to complete an investigation into these allegations.
Grover may have to go through a long-drawn legal fight in Indian courts, since his emergency arbitration plea before the Singapore International Arbitration (SIAC) was dismissed by the court after the first day of the hearing. The SIAC plea was largely seen as Grover’s attempt to seek indemnity for many future liabilities while selling his stake back to the company.
Satish Kishanchandani, managing partner, Pioneer Legal told FE that Grover may seek protection from a high court for interim reliefs. “But seeing the situation as it stands, and the fact that he has resigned from his employment, it would seem he is trying to regroup and build a strategy to resolve this conflict. The articles of BharatPe and the investment documents will play a key role in deciding the fate of shares held by Ashneer Grover. It is usual to have buyback clauses in case the promoter’s employment is terminated for cause,” said Kishanchandani
Kishanchandani also added that in the instance of BharatPe and Grover, if the language of the AoA or shareholder’s agreement provides a right to the board to force a buyback in under any of the clauses, the board may be able to force him to sell only the reserved or locked shares. FE reached out to Grover for a comment but multiple requests for an interview were left unanswered until press time.
“…and consequently, he (Grover) may not be able to sell these shares. All this is dependent on a lot of factors including how the language of these documents is interpreted. We will also have to understand his strategy in dealing with this ongoing tussle,” added Kishanchandani.
