Zilingo - From Hero To Zero

Zilingo, one of Singapore's startups, has suspended chief executive officer Ankiti Bose after an effort to raise new funding led to questions about the company's accounting. The company, which supplies technology to apparel merchants and factories, had been trying to raise US$150 million to US$200 million when investors began to question its finances as part of the due diligence process.

The investment - which could have boosted Zilingo's valuation to more than US$1 billion. The startup's investors, which include Temasek Holdings and Sequoia Capital India, have started an investigation into the financial practices.

Zilingo's auditor raised questions about its accounting. The concerns centre on the way that Zilingo, which regulators said had not filed annual financial statements since 2019, accounted for transactions and revenue across a platform spanning thousands of small merchants.

Bose Claimed No Wrong - Bose has disputed allegations of wrongdoing and contends her suspension was due in part to her complaints about harassment. She has hired an attorney to represent her and has called the investigation a "witch hunt".

The exposure represents a dramatic turn of fate for one of Singapore's most celebrated startups. Zilingo was founded by Bose and chief technology and product officer Dhruv Kapoor in Singapore seven years ago to help small businesses across South and Southeast Asia sell their goods online.

What Zilingo Offers - 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 realised 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 US$226 million from investors including Sequoia and Temasek, and pushed its valuation to US$970 million, almost the US$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. Bose had worked at Sequoia earlier and had said the experience helped her build the startup.

Blame It On Covid - Zilingo, which had grown into a full-blown marketplace for wholesale buyers and sellers in the fashion industry, faced growth troubles after pandemic-fuelled 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 US, 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 US$40 million in fiscal 2021 to roughly US$60 million in fiscal 2022 and US$100 million the year after. Zilingo said it anticipated breaking even on core Ebitda - or earnings before interest, taxes, depreciation and amortisation - in fiscal 2023 and then reach almost US$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. She was later questioned by two people from Kroll, the investigations firm. Her suspension is scheduled to run until May 5.