India’s startup ecosystem has been hit with several cases of financial impropriety in the recent past, but allegations of corruption going back two decades are also being uncovered.
The CBI has alleged that VC firm Sequoia Capital made suspicious payments to a firm controlled by Congress leader Karti Chidambaram in an attempt to attain favourable government decisions. The CBI has registered a case against Sequoia after an investigation into the payments was launched in 2018. Karti Chidambaram, who is now a Congress MP from Sivaganga in Tamil Nadu, has denied the charges, saying he was “neither a shareholder nor Director” of the firm in question.
The CBI case document alleges that the Mauritius unit of Sequoia Capital made suspicious transactions to a firm controlled by Karti Chidambaram in a bid to influence public servants to secure approval for an investment in India in 2008. Karti Chidambaram Chidambaram is the son of P Chidambaram, who was India’s finance Minister at the time. CBI said that Sequoia’s proposal was approved in November by P Chidambaram in November 2008 after the payments were received by his son’s firm.
Sequoia has one of the best-known venture capital firms in the world, and was in early investor in companies like Google, Apple and WhatsApp. Sequoia Capital had entered India in 2006 by acquiring the team of WestBridge Capital, an Indian venture capital fund. Some of its most prominent Indian investments include Zomato, Byju’s, Oyo Rooms, Freshworks, Ola, Pine Labs, Unacademy, Razorpay, Cars24, and Dailyhunt. Sequoia India had rebranded to Peak XV Partners in June 2023.
Sequoia, incidentally, has been at the center of several cases of financial impropriety in the Indian startup ecosystem. Sequoia had taken BharatPe CEO Ashneer Grover to court, alleging that he’d misappropriated over Rs. 80 crore from the company by making fake invoices. The case was later settled. Another Sequoia portfolio company GoMechanic’s founders had allegedly created fake garages to artificially inflate their revenue numbers. Sequoia had also been instrumental in firing Zilingo co-founder and CEO Ankiti Bose over alleged misappropriation of funds. Additionally, India’s Enforcement Directorate had raided Byju’s, another Sequoia company, for breaking India’s foreign exchange laws. And with Sequoia itself now accused of bribing Indian government officials for getting investment approvals in the country, it appears that India’s startup ecosystem isn’t immune to the graft that pervades other aspects of India’s business life.