Is Bad Blood with Ashneer Grover Destroying BharatPe?

Entering a competitive market filled with big players is a decision that could either work in favour of or destroy a company. When BharatPe, a digital payments company, decided to enter the fintech sector in 2018, it was one-on-one against big names like Paytm, GooglePay, PhonePe, etc. Despite all odds, they achieved prominent milestones like reaching a valuation of $2.85 billion and raising funds up to $680 million in just 4 years.

One big reason for the company's success was its founder Ashneer Grover. The same founder was then ousted from the company as well as the MD position in 2022. I mean, what did Grover expect after the alleged fraud and financial irregularities in cooperation with his family? But, the way things went down between the Grover family and BharatPe was a source of absolute drama for the business world, the aftereffects of which are still visible.

Ashneer Grover has been pretty vocal about his dislike of how the business is going down at his old workplace. From openly criticising the management at BharatPe to predicting the company's downfall with comments like "$3 billion write-off", Ashneer is not one to hold his tongue.

Now, when BharatPe is planning on regaining traction in the market, Grover is ready to slash down the company's efforts with his word-sword. The picture became clearer a few days ago when BharatPe's Chief Business Officer resigned, and Ashneer posted another tweet targeting the higher-ups.

The overall theatrics with the company’s ex-founder led to BharatPe losing credibility and a good name in the sector. The situation is so bad now that the company reported a shocking loss of ₹5594 crore in 2022.  

Let’s see how things turned out this bad for the company in…

The End That Started It All

If you ask me to describe Ashneer Grover in one word, I would say "dramatic" and I believe most of you would agree. He has been crowned as an extremely rude judge in the business reality TV series "Shark Tank". Allegations of misappropriation of funds and fraud of about ₹81 crore are some of his recently gained achievements. 😬

Let’s take you to where this all started. Grover co-founded BhartaPe with Shashvat Nakrani and Bhavik Koladiya in 2018. By then, Grover was the CFO of Grofers (now Blinkit) and had a shining career with names like American Express Bank and PC Jewellers in his resume. His shining profile and influence pushed the founders to approach him as an angel investor for the company, to which Grover answered by accepting the position of the 3rd founder.

Things started well enough for BhartaPe with their QR code payments business model. Though this model was successful in the market, BhartaPe was not charging any commission for UPI transactions from its merchants. So, how exactly did the company earn money? 🤔

 Well, BhartaPe introduced equated daily instalments as P2P lending options. Merchants could pay back daily through this service, but it didn’t give as big a margin as BharatPe expected. So, they brainstormed a new method of selling POS machines called “BharatSwipe” at half the price of regular machines available in the market. You must remember the machines in stores that accept cards as a payment method. They looked like this 👇

Thus, in this way, BharatPe stood proudly in the fintech market with “Grover” and the “rising number of digital payments” as its two pillars. But then Ashneer Grover and his family’s indiscretions were discovered and proved true by the company. Due to this, Grover had to resign from being the Founder and Managing Director of BharatPe.

BharatPe’s Troubles In A Nutshell

Well, what’s done is done, and after Grover’s embarrassing exit from BharatPe, the company has seen bad days, the ending of which doesn’t seem to be near. The loss of ₹5594 crore speaks for itself, against revenue of ₹321 crore. This humongous loss was not sudden, as BharatPe had been reporting increasing losses over the years. The infographic below will help you create a picture of how the deterioration of financials at BharatPe is directly proportional to alleged fraud in 2022.

And, for the record, Grover's exit was embarrassing, what with shareholders and other founders revealing Grover's misdeeds. Plus, let's not forget the leaked audio call where Grover was heard badmouthing an employee from Kotak Mahindra Bank for being unable to finance Nykaa’s IPO for him and his wife. It was one thing after another, and then the tank titled "Grover's Misusing His Influence in the Company '' overfilled and flushed Grover’s MD position away. 

So, Ashneer had unresolved feelings, which led to all the criticism going on. This negativity affected the company as it succeeded in painting a grimy image in people's minds. Investors began doubting the company's potential, and consumers found the platform less than the competitors. In this way, BharatPe is now in supposed danger of a valuation slashing from its previous funding round value of $3 billion.
    
Apart from this, BharatPe also had trouble with its earning methods as both the P2P lending feature and POS machine had certain loopholes. There are many options available in the market when it comes to QR code UPI transactions and POS machines. Just check out this pie chart of the UPI transaction division in India. BharatPe is stuck in the 4% (Others) section, far from the main leaders in the sector.

BharatPe has been trying to deal with its troubles, but they just have too much on their plate. Multiple lawsuits, a few against Grover and a few still being fought- all costing them both capital and labour. Their new platform, 12% Club, also has many issues, including low visibility, high expenses, and more.

The Bottom Line

To be honest, Grover kind of reminds me of Elon Musk, X's CTO and SpaceX's founder. Both are popular personalities with too much to say, and both use the same medium to overuse their vocal cords or should I say fingertips. Now, it’s BharatPe’s burden to deal with the continuous onslaught of Grover’s tongue-lashing and manage their finances. But, for now, their comeback seems difficult to come true. But you never know! The whispers of the fresh equity fundraising of $100 million might do the trick.