The company, which supplies technology to apparel merchants and factories, was trying to raise $150 million to $200 million with the help of Goldman Sachs Group Inc. after investors questioned its finances as part of the due diligence process. began to raise, people asked not to be identified because the information is confidential.
That talks, which could have raised Zilingo’s valuation to more than $1 billion, stalled, he said.
The startup’s investors, which include Temasek Holdings Ptey and Sequoia Capital India, have begun an investigation into the financial practices, the people said. He said Zilingo’s auditors raised questions about its accounting. The concern centers on the way Zilingo, which regulators have said has not filed annual financial statements since 2019, is responsible for transactions and revenue on a single platform of thousands of small traders.
According to two people close to the situation, Bose has disputed the allegations of wrongdoing and says his suspension was due to his complaints about harassment. It has hired a lawyer to represent Abraham Varghese of Providence Law Asia, and called the investigation a “witch hunt,” according to correspondence reviewed by Bloomberg News.
Zilingo and Temasek declined to comment. Both Bose and his lawyer declined to comment.
According to regulatory filings, two of Zilingo’s directors, Temasek’s Xu Wei Yang and Burda Principal Investments Ltd.’s Albert Shay, left their boards last month. Zilingo acquired Citigroup Inc. in mid-2019. The U.S. veteran James Perry was appointed its chief financial officer, but he went on to return to the American bank about a year later.
The conflict represents a dramatic turning point in the fortunes of one of Singapore’s most celebrated startups. Zilingo was founded by Bose and Chief Technology and Product Officer Dhruv Kapur seven years ago in Singapore to help small businesses in South and Southeast Asia sell their goods online.
The company began working with small merchants who sold to consumers, and then expanded into surrounding areas. As the founders began talking with short sellers, they realized that many did not have access to strong technology and the necessary capital.
This prompted them to develop software and other tools that would allow merchants to access factories in places such as Vietnam or Bangalore, and would facilitate the complex process of shipping across borders. In 2018, Zilingo began collaborating with fintech firms to provide working capital to short sellers so they could purchase raw materials to produce goods.
In early 2019, Zilingo raised $226 million from investors including Sequoia and Temasek, raising its valuation to $970 million, the roughly $1 billion mark that earns the startup designation as a unicorn. Bose, then 27, was celebrated as a visionary and a sign of entrepreneurial potential for Southeast Asia.
She said at the time, “We were twenty-something and there was nothing but this dream and we decided to pursue it.” Bose had previously worked at Sequoia and said the experience helped him build the startup.
Zilingo, which has grown into a full-fledged marketplace for wholesale buyers and sellers in the fashion industry, is facing growth problems after pandemic-fueled restrictions forced many small businesses to close their doors. fell. To rein in its own costs, Zilingo said it cut several jobs in 2020 and reduced marketing, sourcing and support teams in the US, Australia, Singapore and Indonesia.
The company made an aggressive pitch in its latest attempt to raise fresh capital. According to presentation documents reviewed by Bloomberg News, at the end of last year, it was estimated that core net revenue would grow from about $40 million in fiscal 2021 to about $60 million in fiscal 2022 and $100 the year after. million will be Zilingo said it also forecast breaking even on core EBITDA — or earnings before interest, taxes, depreciation and amortization — in fiscal year 2023 and then reaching nearly $200 million in fiscal year 2026.
According to correspondence reviewed by Bloomberg, on March 31, Bose was called to a meeting with three board members and told about “serious” complaints about discrepancies in accounts and mismanagement. He was later questioned by two men from the investigative firm Kroll. His suspension will last till May 5.
Through his counsel, Bose has argued that the directors did not follow due procedures during the process and questioned their right to suspend them, according to Zilingo’s correspondence with his lawyer.
“We are of the view that the suspension of our client has been obtained by invalid and faulty means; That the investigation initiated against him is unwarranted and lacks in due process, and that he has been suspended without proper and proper cause,” his lawyer wrote.
This story has been published without modification in text from a wire agency feed. Only the title has been changed.