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The founder of Bharat Pe, Ashneer Grover, famous for his abrasive remarks on Shark Tank, is now coming up with his new venture with wife, Madhuri Jain.

But what about Bharat Pe?

Yes, he was the founder of Bharat pe. But, he is not a part of the firm anymore. In what erupted as a highly controversial drama, Ashneer’s calls were leaked where he was allegedly threatening the employee of Kotak Mahindra Bank.

Following the bitter row, He and his wife were also slapped with the charges of fund manipulation and mismanagement with the firm Bharat Pe. The matter intensified as we saw Bharat Pe’s CEO making an outright allegation on Ashneer of creating fake vendors and siphoning off millions. [1]

But how could he be forced to quit his very own company!!

Yes, you hit the right chord. I, too, was dumbstruck like you when I heard this news of Ashneer quitting Bharat Pe until I found this tweet.

“I write this with a heavy heart as today I am being forced to bid adieu to a company of which I am a founder. I say with my head held high that today this company stands as a leader in the fintech world.”

Here, in clear words, he states that he won’t have any investors from now on and will run his next company entirely on his own money.

Why what went wrong with investors?

BharatPe had raised around $600 million from equity and debt financing, which is huge if we consider the company’s $2.8 B overall valuation. [2]

Hmm, no wonder why the CEO and investors had so much power!

Yes, let us take a few examples from Shark Tank itself to understand this clearly. Several startups, not so well placed, came on the show in demand of equity or fund. And then we had the smart sharks, including Peyush Bansal and Aman Gupta who literally bought a 50% stake in their company. What happened next?

What else can you expect? The founders committed on the show itself to move to Shark’s city as an employee.

Surprising, isn’t it?

But, this is all the game of money and stake. The more one invests, the more stake they have. It doesn’t matter if you are the founder or not—a harsh reality prevalent in today’s “Clutch of Investors” Startup ecosystem.

How does it harm the founders?

As we discussed in the Overvaluation article, how the founder’s company share goes on to hit a lowly low point as the number of investors increases in the company.

This doesn’t only lead to an outright stake reduction of the founder but also creates a lot of panic around that.

And the results?

It can get nasty. Founders may resort to measures such as Overvaluation or fund manipulation to somehow manage to get a bigger stake. I am not saying Ashneer did that. But, the possibilities like these surely lay the grounds for accusations, as we see in BharatPe’s case.

It was further supported by the audit where the company had lost around 10.97 crores due to fraudulent invoicing. And according to sources, Madhuri, Ashneer’s wife, was the one managing the invoices. [3]

Has Ashneer finally left Bharat Pe with no money?

A high drama controversy erupted between Ashneer and the BharatPe CEO, Suhail Samee, over the latter’s derogatory tweet on Ashneer’s sister post, with Ashneer  threatening Suhail with legal actions.

The BharatPe Saga, Ashneer, along with a few more incidents, finally submitted his resignation to the chairman, Rajnish.

Now coming to the money part. Well! he had demanded a whopping 4000 crore. But, he is all set to lose 1.4% of his equity if PWC indicates any wrongdoings. 75% of his share in the company has also been seized till then. [4]

So, the 4000 crore doesn’t seem to be materializing now.

So, how will Ashneer manage the new firm without investors?

After facing a double blow of allegations and resignation, Ashneer is set to launch his new venture with his own money.

Own money!!

Yes, you heard that right. Gone are the days when the BharatPe founder just had 100 crores in his pockets when he started the company. Today, his net worth is pegged at a whopping 21000 crore. [5]

So, how did he amass such a huge fortune?

So, let me tell you, he was not only the founder of BharatPe but an active investor of many startups – endowing him with huge stakes.

And if you watched Shark Tank, you would know how picky he is while choosing a startup in which he wishes to invest – choosing only those that can offer him a massive return on investment.

Along with that, the IIT and IIM graduate has worked in prestigious firms before BharatPe, including Kotak Mahindra, Grofers, PC jeweler, etc.

But what does this has to do with his new startup!

It has. Expertise in the field of startups always comes in handy. To say the least, it allows you to allocate your capital wisely. So, it is less likely that somebody, as experienced as Ashneer will waste even a penny while self-funding his new venture.

Plus, he is aspirational and determined, after all!

So, how aspirational is he?

Aspirational enough to get Salman Khan for Bharat Pe’s advertisement, that too, in the initial days of funding.

I hope you got an idea. And you wouldn’t believe Ashneer also managed to do a 50% bargain!

No doubt, we Shark Tank fans know how good a bargainer he is.

Ashneer recently shared a funny incident where he tried to bargain with Salman Khan’s manager to get his price down for the Bharat Pe ad. The matter got intense when the manager almost said, “have you come here to buy vegetables.” But, he didn’t lose his cool and kept bargaining until he almost halved it to 4 crores from 7.5 crores.

He had solid math behind it, where he had 100 crores in total for his startup. A 7.5 crore ad along with broadcasting would have cost him around 20 crores which was too much as per him to invest in an ad. But hell-bent on getting Salman khan, he managed to finish the deal at the price he could afford. [6]

Mathematical + Determined + A brilliant Negotiator

How could his startup not succeed?

What is his startup all about?

From what he has revealed now, it seems like his startup will offer 3rd party computer packages and solutions. The objects pursued include import, export, distribution, customization, testing, benchmarking, and designing, all in the area of the software business.

Right now, little has been revealed about the venture carrying a capital share of 20 lakhs with the paid-up capital of ten lakhs. As of now, we know that Grover holds 9,90,000 equity shares, while his wife, Jain, holds 10,000 equity shares. [7]

How is Bharat Pe doing after Ashneer’s exit?

In an immediate slowdown, the company’s funds drastically decreased by more than 50% and continued to drop every week.

What explains a massive slowdown?

The controversy and Ashneer’s resignation have triggered most of it, with almost everyone getting dragged into the controversy. The situation looks murky as SEBI and RBI could also revoke the license if the directors are found guilty. [8]

What about the CEO, SBI chief, Rajnish?

Yes, he was brought into the company for his expertise in financial sectors, but he got into the firm when everything was going haywire. And as the saying goes, “When the bulls fight, the crops suffer,” he too is being dragged in the tide.

Must have been accusing the bad time he joined the company!

But isn’t this a short-term distress?

Yes, heavy distress, to be honest.

Let us understand that a company’s growth is majorly dependent upon its output. And the output is not only limited to short-term growth. The rate at which a company grows annually does leave a cascading impact on the growth trajectory of future years.

In Bharat Pe’s case, many competitors are growing crazily high if we look at their annual growth rate. Paytm, for example, has grown by a whopping 123% – standing as a clear leader in the FinTech industry. [9]

Till then, most of the growth that otherwise would have been achieved by Bharat Pe has now been sabotaged – as most of its company members aren’t deployed in planning growth strategies but managing a huge controversial setback.

On top of it, you know what’s more distressing?

The company’s lost vision

Usually, founders are the ones who we call the backbone of a company. Without founders, the company loses the vision and determination.

Right now, Bharat Pe’s board is going all the way out to protect the last hope of the  Fintech firm, the co-founder – Shashvat Nakrani. Let us see how far they sustain!

Bharat Pe has been such a massive fall! What is the lesson to follow?

What we could see destructing the firm was – a tussle between the founder and investors over financial irregularities. There were many stakeholders, after all!

Nowadays, startups are getting a fair number of investors’ options. It gets messy when investors or board members don’t have complete access to financial information. It is often the case as auditors nowadays fail to sniff any irregularities. Satyam and IL& FS are classic examples of that. [10]

So the answer or the lesson we can say could be – Corporate Governance. A solid Corporate Governance framework and disincentives for financial irregularities are the best way to go about it.

So, that was from a firm’s perspective, but any learnings for founders?

Surely, a solid strategy and a firm determination like Ashneer’s to start it all over again with equal or even more enthusiasm while also rectifying past mistakes.