Nestaway had been sold in a distress sale in 2023, but it appears that the story of the startup isn’t yet over.
Nestaway’s former founder and CEO has sued his co-founders and the company’s investors for fraud. Amarendra Sahu has filed a case against co-founders Jitendra Jagadev and Smruti Parida, as well as investors Tiger Global, Goldman Sachs and Chiratae Ventures. The police complaint has been filed in Odisha, Amarendra Sahu’s home state, and accuses the parties of engaging in fraud, forgery and coercion during Nestaway’s sale.
Sahu alleges that his signature was was fraudulently used to execute NestAway’s sale to proptech firm Aurum in June 2023, and that he was forced to sell his stake in the company. Sahu claims he’d resigned from his Nestaway Directorship before the deal was even completed. “I was coerced and threatened by Deep Varma of Tiger Global, who insisted that I have just 24 hours to agree to sell my shares and resign as CEO and MD,” Sahu has said in the FIR.
Sahu also alleges that the lead investors presuaded him to sell his 5% stake by promising a payment of Rs. 11.72 crore apart from the value of his shares, but the money wasn’t transferred. According to the complaint, Chiratae Ventures’ representatives, acting on behalf of a group of investors, assured him via email and WhatsApp that the payout promise was “sufficient and binding”. They urged him to “trust their word and email in the interest of time and past relationship”. “Chiratae Ventures, representing all investors, emailed me confirming the payment of Rs 11.72 crore, stating it was agreed by all and was binding,” Sahu has said in his complaint. He alleges that investors reneged on this offer after NestAway’s sale was completed, and he never received the payment he was promised.
Sahu has also accused his co-founder Jitendra Jagadev — who’s currently the CEO of Nestaway — of colluding with investors to undermine him during the sale process, leaking confidential company information to Aurum PropTech and conducting parallel negotiations. “Jitendra (Jagadev), who had access to company records, shared sensitive data with Aurum PropTech, jeopardising the company’s interests and sidelining me,” Sahu has said in the complaint.
Nestaway had been sold for Rs. 90 crore to Aurum in June 2023. The company had raised Rs. 900 crore from investors over the previous 8 years, and had been once valued at Rs. 1,800 crore. The Rs. 90 crore slump sale saw the company’s founders and investors lose most of their time and investment in the company. Nestaway had never made a profit, and was struck a body blow during the coronavirus pandemic when tenants left and demanded their deposits back.
There have been several instances of startup founders and investors battling it out in courts in India, but this might be the first time when an founder has sued his own co-founders for fraud. In the past, companies like Byju’s, BharatPe and 4B Brokers have seen investors and founder disagreements reaching the courts in India. And as India’s startup ecosystem becomes bigger and the financial stakes get higher, more and more disputes seem to be requiring the involvement of the judiciary for their resolution.