Ashneer Grover, co-founder and managing director of the $3 billion valued fintech BharatPe said he has taken a voluntary leave of absence till March end amid growing scrutiny and pressure regarding his abusive language to a Kotak employee, toxic culture at BharatPe, and abrasive behaviour on the show Shark Tank.
Behind the scenes though, BharatPe’s board of directors – investors from Sequoia India, Ribbit Capital, Coatue Management and senior bankers– ex-SBI Chairman Rajnish Kumar and ex-Union Bank Chairman Kewal Handa– were unanimously insisting that Grover needs to leave for some time, said people familiar with the matter.
\”The board was not in favour of firing him and wanted the media dust to settle. They wanted to give him time to settle down and get rejuvenated. This is a personal issue and not a professional one to fire him on,” said one person.
Grover’s fortunes have rapidly unravelled in the last two weeks, from being recognised as the founder of one of India’s hottest startups, one which became worth $3 billion in 3 years, to being squarely blamed on social media and by fellow investors and founders for all that is wrong with the Indian startup ecosystem- harsh treatment of people, large funding rounds for unsustainable businesses and a punishing win-at-all-costs culture.
While BharatPe’s troubling work culture has been spoken about the last two years, Grover is stepping down led by the furore over his words to a Kotak Mahindra employee for not getting allocation to Nykaa’s IPO. Grover originally denied the leaked audio was his voice, but the evidence became irrefutable later, as Kotak in a legal notice said it objected to “inappropriate language used.”
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“There are no clauses in his contract to cover personal reasons of this nature. You can usually fire a person only if there is a criminal cause or financial fraud or if they did something morally wrong,” the person cited above said.
Grover also made sharp and rude comments on the show Shark Tank, where founders pitch to investors like Grover (sharks) to sell portions of their company and raise money. In one case he told an 8-months-pregnant woman who came to pitch that she isn’t taking her business seriously.
“In this case they saw this as a personal issue and hence decided to send him on leave instead of firing him,” the person added. While the altercation with Kotak was of a personal nature, Grover’s direct and standoffish demeanour has previously antagonised investors and senior employees, impacting the company directly.
In late 2020, Suhail Sameer, a consumer goods veteran joined BharatPe and became its CEO, handling daily operations, leaving Grover to oversee fundraising and big picture plans. Sameer and Grover both sit on BharatPe’s board. Sameer and co-founder Bhavik Koladiya will continue to manage day-to-day operations.
\”When they made Suhail CEO, the Board was clear that Ashneer should not run the company. His position as MD was to manage reputation. Now in this issue when a reputed party like Kotak is involved, the Board may well say why have any relationship with Ashneer at all. They may just need time to work out details of his current contract,\” an investor said.
Firing Grover indefinitely may also have been unlikely because Ribbit Capital, BharatPe’s third-biggest investor shareholder, until this leave, has always sided with Grover on company matters, even when other investors may raise questions, another person said.
“Ribbit wants to be the ultimate founder-friendly investor. So they have always sided with him. Unless every investor, from the beginning, makes it clear that the founder has to behave a certain way, it is hard to enforce, and impossible to just fire him,” the person said.
Employees and other senior startup founders are sceptical about what this temporary exit really means or represents, and whether it will really lead to broader change or introspection.
“It is just a stunt. He will be part of it, if not directly then through his wife (Madhuri Jain Grover) who heads internal control and finance,” said a former employee who left recently.
“It sounds like he is taking an unpaid vacation. I expected the board to conduct an investigation. This looks like a weak response,” a founder said, requesting anonymity.
BharatPe was also celebrated for receiving the much-coveted banking license when it acquired troubled PMC Bank via a joint venture (JV) with Centrum. The Reserve Bank of India looks through its ‘fit and proper’ criteria before granting a license. Grover’s comments could lead to the JV or license being reconsidered.
“As far as I am aware, Centrum is not reconsidering the JV. They have received the license, there is no going back. There are many exit conditions if any one of them has to exit or withdraw capital. So it won\’t be easy to break the JV,” an RBI source said, requesting anonymity.
Grover’s temporary leave caps a saga where everything about Indian startups has been questioned. Many people said it reminded them of Housing.com’s Rahul Yadav, fired under similar charges of misconduct, and whose rollercoaster journey represented the 2015 funding boom and its sudden end.
Priyanka Sahay and Priyanka Iyer contributed to the story