It was March when the popular Singaporean Information technology company and a celebrity CEO fired its 30-year-old Chief executive officer Ankiti Bose over allegations of alleged financial irregularities. Within a few weeks, creditors started calling back loans, more than 100 workers had quit, and Ms. Bose found herself fired—even though she insists she did nothing against the rules and regulations. The future of the individual firm is now in doubt.
The Zilingo collapse has shaken the tech sector in Southeast Asia and elsewhere. The start-up received more than US$300 million (S$414 million) in funding from some of the most illustrious investors, including Temasek, a Singapore investment business, and Sequoia Capital India, the country’s division of the Silicon Valley firm that financed Apple and Google. Celebrity Ms. Bose travelled the world, speaking at tech conferences from California to Hong Kong.
According to interviews with more than 60 people, including current and former employees, investors, business owners, and friends of the major figures, Zilingo suffered under Ms. Bose’s direction for many years. Her subordinates claim that her management style alienated workers and damaged the company.
The startup switched between different sales strategies, including a $1 million promotional trip to Morocco, consumer loans, and a flimsy foray into the US. According to 2 former workers, she on just one occasion developed a fixation on “crazy growth” in a shot to draw in Masayoshi Son, the powerful Japanese package bourgeois.
The strained relationship between Ms. Bose and Mr. Shailendra Singh, head of Sequoia India, a longtime backer, is at the root of the company’s demise. According to persons acquainted with their relationship, who spoke on the condition of anonymity because the meetings were private, Mr. Singh lost faith in the managerial abilities of the young founder he had supported, and Ms. Bose thought Mr. Singh betrayed her by forcing her out of her particular company.
According to the sources, the dispute got so heated that Sequoia’s attorneys ordered that Ms. Bose stop making accusations that would damage the company’s reputation in a court notice issued in May.
The problems at Zilingo bring the culture of internal corporate governance that appears to be loose and is typical in the startup sector due to celebrity CEO. The business neglected to submit annual monetary statements for 2 years, which may be a demand for all corporations of its size in Singapore. The financial year 2020 results for Zilingo have not yet received approval from the auditor KPMG. Although it is common for start-ups to miss these deadlines, which might result in a fine of up to $600, it is usually a red flag that the board may need to take more drastic measures.
However, at the end of 2020, investors increased their investments in Zilingo, notably Temasek and the investment arm of the Economic Development Board (EDBI). The majority of the company’s shareholders only formally took action against Ms. Bose after whistleblower accusations were made earlier this year.
A forensic investigations agency was chosen to investigate with the backing of the majority investment shareholders. The corporation later dismissed Ms. Bose for reason based on the results of that investigation following a thorough procedure that lasted over two months and included several chances for Ms. Bose to present documents and information.”
The story has also served as a warning to the region’s tech industry, which is analyzing the effects of Covid-19, the crisis in Ukraine, and worldwide price shocks on the global economy.
According to seasoned investor Jim Rogers, head of Rogers Holdings in Singapore, “Whatever happened at Zilingo that is a startup, there will be a lot more tragedies in the next couple of years as the large international recession impedes hot shoots from obtaining money.” I’ve witnessed this rodeo before.
Numerous internal documents of the Zilingo startup, emails, messages, and other pieces of media were examined by Bloomberg News, and Ms. Bose participated in two in-depth interviews—one before and one after she was fired from the business on May 20. According to the records and those with inside knowledge of the situation, the board’s decision to fire her was not a hasty one but rather the result of years of strain.
In a statement to Bloomberg News, Zilingo startup and its board stated that “board members were concerned about the company’s performance over the last few years and wished to discuss solutions to review the company’s performance, including cash flow.”
According to an early employee with first and knowledge of the occasion, it was a complete failure. With each US$1 invested, #ZilingoEscape aimed to add one million new users. The source stated that the final total was around 10,000. Ms. Bose declined to address the campaign specifically but said that it was funded from the company’s $10 million yearly marketing budget.
Ms. Bose claimed the termination procedure was a “unfair witch hunt” and refuted claims that she was given many chances to react to charges. She claimed that the investigative report, which was kept confidential, was not available to her. She responded to make changes by stating that the team reduced cash burn by 70% between the end of 2019 and the end of 2021.
She said in July that “it was not simple, and we did not succeed at everything.” Despite the chaos and suffering, we managed to complete the task and gave it our best shot.
The history of Zilingo’s founding is rooted in Southeast Asian startup mythology. While perusing Bangkok’s Chatuchak market, where 15,000 vendors sell products from all around Thailand, Ms. Bose had the idea. She and her co-founder Dhruv Kapoor set out to create a platform for the startup that would enable these small business owners to market to customers all around Southeast Asia.
Mr. Singh played a key role right away. Ms. Bose and he had collaborated at Sequoia, and he help out a fellow employee. Mr. Singh began his career working alongside seasoned investors Michael Moritz and Doug Leone in the Silicon Valley branch of Sequoia. Over the course of 16 years, Mr. Singh developed Sequoia Capital India into the largest venture capital (VC) firm in the area, with about US$9 billion in assets under management and 36 unicorns across Southeast Asia.
When Ms. Bose was 23 years old and Zilingo was in its seed round in 2015, he contributed to each subsequent round of fundraising. In an email obtained by Bloomberg News from 2016, he told a different venture capitalist, “We think the world of her.”
But like many newcomers, Ms. Bose and Mr. Kapoor encountered difficulties almost right away. Due to Southeast Asia’s fragmented economy and low average income, which includes a variety of languages and currencies, their consumer-focused fashion website faltered. By the end of 2017, they decided to transform Zilingo into a business-to-business marketplace where small producers and distributors could offer their products directly to local small shops.
Investors contributed $54 million to Zilingo’s funding in 2018. Nine social media influencers were flown to Morocco for a three-day fiesta at a cost of US$1 million, which included camel rides, a journey in a hot-air balloon, yoga sessions, and fine dining.
It turns out that the business was squandering cash. In less than two years, the US$226 million that Zilingo had raised from investors had been spent.
The pandemic hit the company hard in 2020, and Ms. Bose saw the potential to provide personal protective equipment. She signed a deal in April to provide India with 10 million KN-95 masks, valued at US$22.5 million. Six months later, Zilingo found itself in a legal dispute with the Indian government over the alleged late delivery of 3.2 million masks.
For Zilingo, the drive for leadership may have arrived too late. A board director and an advisor to another shareholder questioned Ms. Bose about her $50,000 monthly income approximately a week after she had been suspended. According to those with knowledge of the situation, her job contract from five years ago specified that she would make $8,500 a year. The adviser had only learned that she had been making far more since 2019. Despite claiming that the figures are incorrect, Ms. Bose omitted to mention her pay.
Currently, the business is in disarray, and some employees claim they are concerned for their futures. In June, the board was considering liquidating the business. As a result of Mr. Kapoor’s subpar work performance and lack of leadership, Ms. Bose asked to suspend her college friend and chief operational officer Aadi Vaidya after she was suspended in March. Mr. Kapoor and Mr. Vaidya, who are both corporate representatives, choose not to respond. After working at Zilingo for seven years, Mr. Vaidya announced his resignation last week, saying it was “time to move on, clear my thoughts, and reset priorities.”
Zilingo has experienced a sharp decline since Ms. Bose’s fund-raising efforts valued the business at US$1.2 billion just five months ago.