How much of BharatPe does Ashneer really own? It’s complicated

The statement drew the curtains on weeks of sniping between the outspoken executive and the company, which dragged in board members, investors and co-founders and engulfed the company in an unseemly public spectacle. While it all started with a leaked conversation in which Grover was heard abusing a Kotak banker, he and his family now face serious fraud allegations.

While Grover resigned early on Tuesday morning, the company said that was minutes after he received the agenda for the board meeting scheduled for later that day, which was to consider the findings of an independent governance review at the firm.

Grover dismissed the allegations later in the day, asking the board and company management to get back to work and that he was concerned about the value destruction at the firm. After all, as he had said in his resignation letter, he continues to be BharatPe’s single largest individual shareholder.

That claim might come under scrutiny in days to come, as the severe falling out between Grover and the company, including other co-founders and board members, has cast a shadow over the status of a key informal arrangement between the co-founders of the company, according to multiple people close to the development, who spoke on the condition of anonymity. The resolution or the wrangling over it will ultimately determine what share of the firm’s equity actually belongs to Grover. It will also determine the fate of BharatPe’s original founder—a high-school graduate who was jailed for data theft and deported from the US—who might be left with little recourse to secure his rightful equity stake in the company.

That person—Bhavik Koladiya—is now a consultant at the company and has been targeted in recent statements by Grover and his wife, Madhuri Jain.

His story might be among the strangest for any startup founder in India.

While the details of the story are sketchy, according to multiple people familiar with the facts, Koladiya went to the US in 2007 and was running a grocery store where he started accepting payments digitally without a license. This violated data theft and mail fraud laws in the US, and he ended up getting arrested and jailed. After judicial proceedings that went on for 22 months, he was let go with a fine of $100 and deported back to India in 2015.

A statement released by the US Department of Justice on 27 January 2015, the day he was released, detailed the crime Koladiya, aka Bob Patel, had committed: “Koladiya, the operator of the ‘Atwood Xpress’ in Oakland, stole identities from other persons, which he used to open credit card accounts at US Bank, Chase Bank, Discover card, and others, and then bought merchandise, including diamonds, with the stolen credit cards."

Back in the country, Koladiya started going to hackathons and grasped the power of the UPI network. He teamed up with Shashvat Nakrani, an IIT Delhi student at the time and the son of his school teacher from back home in Bhavnagar. The duo incorporated BharatPe in March 2018 with equal shareholding. At the time, Koladiya was the face of the firm and used to speak with investors to raise funds, according to people who recalled such meetings.

In June 2018, Grover joined the duo as a co-founder. Unlike Koladiya, with his chequered past, and Nakrani, who was relatively inexperienced, Grover was a high-profile executive.

An alumnus of IIT Delhi and IIM Ahmedabad, he worked at Kotak Mahindra’s investment banking division before moving to American Express in 2013, where he led startup investments for the card network in India. He led Series B investment in MobiKwik on behalf of American Express. He also worked at Grofers post that and then joined PC Jewellers.

When Grover joined, he got 32% equity, Nakrani held 25.5%, and Koladiya remained the largest shareholder, with a 42.5% stake, according to Registrar of Companies filings from then.

However, six months later, in December 2018, just before Sequoia came on board as an investor, Koladiya’s name went missing from the founders’ list. And ever since then, Grover has become the face of the company.

What happened then is unclear but two people who are in a position to know, and spoke on the condition of anonymity, said that owning to discomfort on the part of large institutional investors to have a person with a jail term in the US on the cap table, the founders and other stakeholders reached an understanding to minimize Koladiya’s public involvement with the firm. The arrangement involved him transferring his stake to Grover, Nakrani, Nakrani’s father (also his erstwhile schoolteacher) and some angel investors.

According to two people with knowledge of the arrangement, Koladiya still owns 5.75% of the company through equity held on his behalf by the other two co-founders. And out of the 8.5% owned by Grover, 3.5-4% of the company is on account of the stake held on behalf of Koladiya, the people said. If this is added to the 1.4% set to be clawed back by the company, as Mint reported on Wednesday, Grover might be left owning 3.5-4% of the company ultimately. One angel investor, who spoke on the condition of anonymity, said the founders had entered into a side agreement regarding the same. According to him, the understanding was that the two co-founders would hold the equity on behalf of Koladiya. It’s unclear how the agreement envisioned compensating him for the same in the future.

Post the investment round by Sequoia in December 2018, the shareholding pattern changed. Grover and Nakrani now owned 29.1% and 23.3%, respectively, in the company. Koladiya’s name disappeared from the cap table, and he also became a consultant to the company so as to avoid being on the rolls of the company he founded.

Grover, Koladiya, Nakrani and Harshjit Singh Sethi from Sequoia did not respond to requests for comment. But if Koladiya indeed holds some instrument by way of a formal agreement that can call back his equity stake from the other co-founders, BharatPe’s cap table might go through another churn. But it’s unclear if Koladiya holds any such instrument.

(The copy has been updated to correct the misspelling of Bhavik Koladiya's name)