Rahul Yadav’s first startup stint with Housing.com had ended with him being escorted out of his own company by hired security guards. His second stint appears to not be going much better.
Info Edge, which runs portals like Naukri.com and Jeevansathi.com, has initiated a forensic audit into Rahul Yadav’s new startup 4B Networks. This comes after it marked down the value of its invested stake in 4B Networks to zero. In 2022, Info Edge had invested Rs. 288 crore into 4B Networks and become its biggest investor.
Info Edge says it has initiated the forensic audit after 4B Networks had failed to give it details of where it had spent the money. Info Edge has sought information, “including details and particulars of financial transactions, transactions with related parties and such other aspects from 4B Networks and its current management,” which 4B Networks is contractually obligated to give, Info Edge said in a filing with stock exchanges.
“However, 4B Networks has repeatedly failed to provide AIPL with such information and has also not responded to the information requests by the Company on several occasions,” the filing added.
“As a consequence thereof, AIPL has exercised its contractual rights under the shareholders’ agreement and articles of association of 4B Networks and pursuant to the same, is initiating a forensic audit into the affairs of the investee company, i.e., 4B Networks and has appointed Deloitte Touche Tohmatsu India LLP as the forensic auditor in this regard,” the filing said.
This marks a further setback for 4B Networks, which had seen its value written down to zero by Info Edge in February this year. “Investment in 4B Networks Pvt Ltd, a partly owned subsidiary of its 100% subsidiary Allcheckdeals India Pvt Ltd, amounting to Rs. 276 crore, has been fully impaired considering current state of affairs and other relevant factors including excessive cash burn, pressing liquidity issues and significant uncertainty towards funding options,” Info Edge had then said.
4B Networks was Rahul Yadav’s second stab at starting a company. It had been founded in 2020, and as per its Linkedin profile, claimed to be a “revolutionary tech platform that facilitates, enables, and empowers brokers and developers.” “Broker Network app is a suite of services specifically designed for Indian real estate brokers and developers,” the company had said. “At its core, it’s a highly efficient matchmaking platform that connects brokers with properties and brokers with buyers. The match engine works behind the scenes, figures out the perfect match with your post and sends prominent notifications to both parties to connect and make deals,” it had added.
By June 2022, 4B Networks claimed to have 50,000 brokers on its platform, and was adding more than a 100 projects on its app every month. The platform has disbursed Rs. 1000 crore worth of home loans by then. It had 500 employees, with Yadav serving as the CEO. At that point, Info Edge had acquired a majority stake in the company. “The investment will help (Info Edge subsidiary) ACD to strengthen its offering in the real estate segment by providing a new platform to real estate industry professionals to conduct their business efficiently through the majority held in 4B post this investment,” Info Edge had then said.
But exactly a year later, Info Edge has not only marked the company down to zero, but has also instituted a third party audit into its finances. This will bring back some uncomfortable memories for Rahul Yadav, who had a tumultuous stint with Housing.com in 2015. In a series of events which had captivated the startup world, Yadav had publicly bickered with Sequoia’s Shailendra Singh, who was a member of Housing’s board, and signed off a public letter to him with “Go die Mother F*cker”. He’d then resigned, taken back his resignation, and then had been eventually fired from the company and escorted out of its office in the presence of security personnel. In response, he’d dramatically declared that he’d distribute his entire stake in Housing, which was then worth hundreds of crores, among Housing employees.
Housing eventually was sold off to PropTiger, and has since been meandering along as one of the country’s many real estate platforms. Yadav had meanwhile disappeared from the public scene, and had quietly founded a new company in the real estate space, this time targeting brokers. Yadav had been as private with his second startup as he’d been public with his first — not much was known about the company until Info Edge had acquired a majority stake in 4B Networks last year. But things don’t appear to have turned out well for Yadav this time around either, with the new company now being valued at zero by its biggest investor and questions being raised over its financial transactions. It remains to be seen what the financial audit will uncover, but it appears that Rahul Yadav’s second entrepreneurial stint is imploding even more spectacularly than his first.