Bhubaneswar, Jan 3 (IANS): After Amarendra Sahu, Co-founder of home rental platform NestAway, lodged an FIR here against the company's investors, including Tiger Global, Goldman Sachs and Chirate Ventures, as well as its fellow co-founders Jitendra Jagadev and Smruti Parida, another domestic startup has courted big controversy.
IANS has received exclusive insights from industry insiders and sources close to the NestAway deal, shedding light on the legal and financial turmoil that has rocked the Indian startup ecosystem.
A company once valued at Rs 1,800 crore in 2020 was sold for a mere Rs 90 crore in cash, despite raising Rs 700 crore in funding, which is a staggering decline in value.
During the pandemic, all co-founders, except Sahu, parted ways with the company, leaving it in a precarious position.
Despite the challenges, the company navigated the pandemic by selling non-core assets and building sufficient cash reserves to sustain growth for at least two more years.
Even after receiving a Rs 50 crore investment offer from Gruhas (Nikhil Kamath’s investment arm), existing investor Tiger Global allegedly chose to push for a sale at a deeply discounted Rs 129 crore instead of supporting new fundraising efforts, according to sources.
Investors took a shocking 80 per cent loss on their Rs 700 crore investment, raising questions about the rationale behind the sale, according to sources close to the matter.
The decision to sell the company at Rs 120 crore came despite its two-year cash runway and fresh funding opportunities, marking it as one of the most baffling and poorly justified sales.
With minority shareholders unlikely to accept such a steep haircut, allegations of investor conspiracy to force the sale have now emerged.
Board member Jitendra Jagdev, privy to sensitive company information, allegedly negotiated the deal on behalf of the buyer while the investors overlooked this glaring conflict of interest.
After Sahu resigned in protest, investors allegedly forged his signature to finalise the sale, a move that undermines corporate governance standards.
Investors transferred their shares to the buyer even before finalising the share purchase agreement, violating both the SPA and shareholding terms.
Goldman Sachs, one of the investors, allegedly delayed Amarendra Sahu’s payout through a one-sided SPA extension. Meanwhile, ex-CFO Sandeep Daga remains unpaid per the SPA terms even a year after investors received their dues. Repeated requests for resolution have gone unanswered, highlighting a lack of accountability.
IANS attempted to contact Kailash Nath and Sudhir Sethi of Chiratae Ventures through direct calls and messages. However, neither had responded by the time of publishing this story.
The NestAway case underscores the legal and ethical challenges plaguing India’s startup ecosystem. With the Orissa High Court set to review the case on January 9, the outcome could have far-reaching implications for the investor-founder dynamics and the broader entrepreneurial landscape.