Info Edge’s Sanjeev Bikhchandani Admits Investment Misstep in Rahul Yadav’s 4B Networks
- ByStartupStory | August 12, 2023
Speaking to analysts following the release of Q1Fy24 results on August 11, Info Edge founder and executive vice chairman Sanjeev Bikhchandani admitted that investing in the realty tech startup 4B Networks, founded by Rahul Yadav, was a misjudgment.
Info Edge recently commenced a forensic audit of the portfolio startup due to its failure to share business information. In addition, the tech investor has taken legal actions, approaching the Delhi High Court and initiating arbitration proceedings with 4B Networks starting August 14. As a result of these developments, the company has written off its entire investment in the startup for the quarter ending March 31, 2023.
“Sometimes we make mistakes. Investors do go wrong… 4B was a mistake. I think we have to admit it. You can’t write off Rs 288 crore saying it wasn’t a mistake. It was a mistake,” said Bikhchandani.
He emphasized that while companies facing challenges is one thing, fraudulent activities are a different matter altogether. Info Edge has conducted internal reviews to assess the need for any changes, including tightening due diligence processes.
Bikhchandani expressed the importance of recognizing warning signs and indicators during conversations with founders that might indicate potential issues. Despite the current funding challenges faced by startups and a substantial drop in investments during H1, Bikhchandani believes it is a favorable time to invest in emerging companies due to reasonable valuations and reduced round sizes.
“At the same time, we are taking our time and being cautious simply because there’s a new risk and a new risk is will this company be able to get a next round of funding with other investors participating or not?” he added.
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