Rahul Yadav, might not be a name that is known to practically everyone, but his acts and controversies certainly have reached far and wide.
Currently, the startup founder is again at the center for one after a major investor in his company started a forensic audit into him and his company 4B Networks and finding out the major losses the company incurred despite the founder himself living a beyond lavish lifestyle, not paying employees since months, and more.
Rahul Yadav And Info Edge Debacle
According to a report by Inc42, Rahul Yadav, the founder of the proptech company Broker Network (owned by 4B Networks) drained away almost Rs. 280 crore in less than 18 months and hasn’t paid around 150 employees since November of 2022.
Broker Network was founded by Yadav in November 2020 meant to be a portal for real estate developers and brokers to connect with each other. The main company 4B Networks managed to earn an investment of Rs. 288 crore from Allcheckdeals India Private Ltd (AIPL), a wholly-owned subsidiary of Info Edge.
Of this around Rs. 276 crores were invested in shares of the company with the other Rs. 12 crores acting as debt financing. On June 1st, 2023 reports came out that AIPL and Info Edge had launched a forensic audit into the company’s running and finances and appointed Deloitte Touche Tohmatsu India as the forensic auditor.
The audit being conducted was disclosed in a filing to the stock exchanges stating “The investments into the shares of 4B Networks and the loan have been fully impaired, in the backdrop of various factors including inter alia excessive cash burn, prevailing liquidity issues and significant uncertainty towards funding options.”
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Info Edge claimed that it had been trying for quite a while to get information about the financial data and other business transaction details of Broker Network but both their requests and legal notices were going unheard.
Apparently Yadav on the other hand had been asking for money in return for sharing the requested data which Info Edge was actually fully entitled to anyway since it owned around 60% of Broker Network as per the shareholder agreement.
Rahul Yadav’s Lifestyle
Yadav, an IIT Bombay dropout, however, has been said to be living a lavish lifestyle, despite the financial crunch his company was seeing.
From buying a Mercedes-Maybach costing between Rs. 2-3 crore to an employee him calling out saying “You tell me where Rahul Yadav is. It’s been 18 months since the company began operations, but I have seen him less than 18 times in the office. He usually hires a boardroom at the Taj Land’s End for INR 80K per day and conducts all his meetings there. No one knows what happens there,” Yadav has been under fire for some time now.
Amit Gupta, also from the startup ecosystem in a LinkedIn post about Yadav said that “A leopard cannot change its spots,” and how “Yadav’s journey shows a pattern of starting companies, raising funds & then shutting them down (in a year or two). It’s the kind of ‘resume’ that should have attracted questions from Info Edge.”
About the cash crunch, Yadav tried to pin the blame on Info Edge saying “Info Edge’s reserved matter rights are the major source of the problem when it comes to settling employee dues. If they (Info Edge) allow me to raise funds, I would be able to pay everyone and save the company.”
This was after Chintan Thakkar, the chief financial officer and executive director of Info Edge emailed Yadav asking about the liquidity problems and how the “company was sitting on INR 140 Cr in receivables (as of November 2022)” as per an Inc42 report.
Yadav ignored the email though, just like he’d been ignoring various other things among them being employee complaints about unpaid salaries. What’s more, according to reports, employees are struggling with ‘advance salary’ loans they were told to take up while under the company that have become personal liabilities now since they are no longer employed there.
Apparently, these employees were made to take up these loans and then transfer the amount to Yadav. In lieu of all this, police and criminal complaints against Yadav and other higher-ups at the company have come forward that the Mumbai Police is investigating.
Housing.com Firestorm
Yadav has been familiar with controversies since his Housing.com days, a real estate search portal that he co-founded in 2012. Launched when Yadav was just 23 years old, the portal became quite a success soon enough and managed to land an impressive investment of Rs. 550 crore ($90 million) in December 2014 by Japan’s SoftBank.
This brought the value of the company to a whopping Rs. 1,500 crores, but the firm did not manage to hold onto that success for very long. Popular perception felt that more money was being pumped into the marketing of the portal than solving the core issues and then Yadav’s attitude started getting attention.
This was especially after, in 2015, he sent an email to Sequoia Capital, one of the biggest venture capital firms in the country and threatened them of stealing his company’s employees and the consequences of it.
Among various lines, as per reports the email copied to 1,500 other employees wrote that “I just came to know you personally are completely after Housing’s employees and are brainwashing them to open some stupid incubation. If you don’t stop messing around with me, directly or even indirectly, I will vacate the best of your firm.”
Soon after this incident became viral though, Yadav apologised and quit as CEO of Housing.com eventually taking a break from entrepreneurship itself for some time.
Though he did raise headlines in the same year when he gifted all his shares said to be worth Rs. 200 crores to his employees saying “I’m just 26 and it’s too early in life to get serious about money”. In a 2019 Forbes interview, he even admitted his mistakes and said how he’d been brash and immature then and knew better now.
But apparently, that is not the case as a source speaking with Inc42 said that in light of this recent controversy “Even if Info Edge was on the board of directors, a founder who wants to dupe investors will do so. Just look at GoMechanic,” and added, “Given this scathing review, it feels that Rahul Yadav may have finally exhausted any remaining goodwill in the market.”
Image Credits: Google Images
Sources: The Economic Times, Business Standard, Inc42
Find the blogger: @chirali_08
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