Zilingo CEO suspended amid financial probe
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Zilingo Pte, one of Singapore’s highest-profile startups, has suspended Chief Executive Officer Ankiti Bose after an effort to raise new funding led to questions about the company’s accounting, according to people familiar with the matter.
The company, which supplies technology to apparel merchants and factories, had been trying to raise $150 million to $200 million with help from Goldman Sachs Group Inc. when investors began to question its finances as part of the due diligence process, said the people, asking not to be identified because the information is confidential.
The company began by working with small merchants that sell to consumers and then expanded into adjacent areas. As the founders started talking with small sellers, they realized many lacked access to robust technology and essential capital.
That led them to develop software and other tools that would allow merchants to access factories in places like Vietnam or Bangalore, and would smooth the complicated process of shipping across borders. In 2018, Zilingo began to team up with financial technology firms to provide working capital to small sellers so they can buy raw materials to produce goods.
In early 2019, Zilingo raised $226 million from investors including Sequoia and Temasek, and pushed its valuation to $970 million, almost the $1 billion mark that earns startups designation as a unicorn. Bose, then 27, was celebrated as a visionary and a sign of the entrepreneurial potential for Southeast Asia.
“We were a bunch of twenty-somethings with nothing except this dream and we decided to chase it,” she said at the time. Bose had worked at Sequoia earlier and had said the experience helped her build the startup.
“We were a bunch of twenty-somethings with nothing except this dream and we decided to chase it,”
Zilingo, which had grown into a full-blown marketplace for wholesale buyers and sellers in the fashion industry, faced growth troubles after pandemic-fueled restrictions forced many small businesses to shut their doors. To rein in its own costs, Zilingo said it cut a number of jobs in 2020 and downsized marketing, sourcing and support teams in the U.S., Australia, Singapore and Indonesia.
The company made an aggressive pitch in its latest effort to raise fresh capital. Late last year, it forecast that core net revenue would rise from about $40 million in fiscal 2021 to roughly $60 million in fiscal 2022 and $100 million the year after, according to presentation documents reviewed by Bloomberg News. Zilingo said it anticipated breaking even on core Ebitda — or earnings before interest, taxes, depreciation and amortization — in fiscal 2023 and then reach almost $200 million in fiscal 2026.
On March 31, Bose was called to a meeting with three board members and told about “serious” complaints about discrepancies in accounts and mismanagement, according to the correspondence reviewed by Bloomberg. She was later questioned by two people from Kroll, the investigations firm. Her suspension is scheduled to run until May 5.
Bose, through her lawyer, has argued that the directors did not follow proper procedures during the process and questioned their right to suspend her, according to the correspondence from her attorney to Zilingo.
“We are of the view that our client’s suspension has been procured by invalid and defective means; that the investigation commenced into her is unfair and lacking in due process, and that she has been suspended without proper and reasonable cause,” her attorney wrote.
Questions & Answers
Q.Why was the CEO, Ankiti Bose, suspended from Zilingo?
Why was the CEO, Ankiti Bose, suspended from Zilingo?
Ankiti Bose was suspended after serious complaints arose regarding discrepancies in accounts and mismanagement. These issues surfaced when investors questioned the company's finances during a new funding round.
Q.What is the reason for Zilingo's financial probe?
What is the reason for Zilingo's financial probe?
The financial probe began because investors, conducting due diligence for a new funding round, raised questions about the company's accounting. This led to serious complaints about discrepancies in Zilingo's accounts.
Q.What is Ankiti Bose's stance on her suspension?
What is Ankiti Bose's stance on her suspension?
Through her lawyer, Bose argues that the directors did not follow proper procedures, questioning their right to suspend her. Her attorney states the suspension was procured by invalid means and the investigation is unfair.
Q.What was Zilingo's financial outlook for the coming years?
What was Zilingo's financial outlook for the coming years?
Zilingo projected core net revenue would rise to roughly $60 million in fiscal 2022 and $100 million the year after. They anticipated breaking even on core Ebitda in fiscal 2023, reaching almost $200 million by fiscal 2026.