US-based venture capital fund Sequoia Capital has recently severed ties of business with law firm Algo Legal. This has come following allegations of ‘concerning incidents’ involving Sandeep Kapoor’s legal firm and related parties.
Such a turn of events was caused post an investigation into one of Sequoia’s investee firms, a portfolio company.
The issue has been gaining ground since mid-December last year, when a Bangalore-based unicorn’s founders conveyed to its board members, including a Sequoia representative, that Kapoor had solicited business in an aggressive manner.
But it was only in May that the problem was recognized when a forensic audit uncovered a financial trail in one of Sequoia’s portfolio companies.
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It has been alleged that Kapoor took advantage of his earlier position as a general counsel of Sequoia that ended in 2019. Apparently, he arm-twisted the portfolio companies to hire his firm, Algo Legal, for legal matters.
Alleged threats with cases of violations of the Foreign Exchange Management Act (FEMA) and investigations or raids by the Income Tax Department, Enforcement Directorate, and other government agencies also surfaced. Also, Kapoor has been blamed for demanding handsome sums of money to bail the firm out of such raids.
An extract from Sequoia’s email to its portfolio on Algo Legal is as follows, “Sequoia India & SEA (and affiliate entities) have terminated all arrangements pursuant to which any services were being provided to the firm by Algo Legal and related entities and has referred the matter to legal advisors to seek their counsel on actions, if any, to be taken.”
The other entities which Sequoia has discontinued relations with include Quant Legaltech, OneDelta Technology Solutions Private Limited, and Themis Law Firm.
Sequoia is known as one of the most successful venture capital firms, renowned for its early investments in Apple Inc. and Google. In the note to its founders, Sequoia claimed that it does “not endorse any firm, entity or person as a preferred service provider for itself or any of its portfolio companies”.
In his defence, Sandeep Kapoor has responded to these allegations in these words, “Algo Legal is a law-abiding entity and has never conducted itself in contravention of any law(s). We refrain from being dragged into a trial by media and reserve our right to seek legal remedies as may be available to us to defend our reputation and seek justice.”
Kapoor has drawn attention to the one-sided attention afforded to the issue at hand and cites the rapid growth of his firm over the last three years as testimony to his clients’ satisfaction.
Disclaimer: This article is fact-checked
Sources: Mint, Inc42, The Economic Times, Bar and Bench
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This post is tagged under: Sequoia Capital, algo legal, capital fund, venture capital, allegations, legal firm, Government Agency, income tax department of India, enforcement directorate, aggressive politics, aggressive behaviour, income tax raids, tax investigation, investigation, enforcement directorate, Misbehaviour, blackmail
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