Choosing an investor is akin to a marriage. It’s a half-jest implication around longevity with the unspoken threat that while you can get out of a bad marriage, it is far tougher to dump a bad investor. However, while marriages are ostensibly fixed until “death do you part”, venture capital (VC) investments come with an expiry date. Founders are not just expected but obligated to deliver an exit to these investors within a set period of time.

Against this backdrop, exits through acquisitions are easier and quicker to achieve than through initial public offerings (IPOs). On paper, at least. Reality is quite different. Pulling off an acquisition requires many pieces to fall in place beyond the obvious one around valuation multiples. Just ask PhonePe and Indus OS.

Last month, it was reported reported Entrackr Exclusive: PhonePe set to acquire Indus OS for $60 Mn Read more that Walmart-owned payments startup PhonePe was acquiring Indus OS, a regional language startup, for US$60 million. But even before the dust could settle around the announcement, news emerged of an ugly legal battle between PhonePe and Affle Global, a minority investor in Indus OS.

The acquisition was supposed to see Indus OS’ existing investors exit, with the founders joining the PhonePe team. Affle, however, claimed that it was not party to this deal. It also allegedly went ahead and bought out the shares of some of the other investors. This took its holding in Indus OS from 8% to 23%.

For its part, PhonePe acquired the shares of Omidyar Network*, JSW Ventures, and other investors. This gave it a 32% stake in the company. It was scheduled to purchase the shares of the founders as well.

Affle is reported to have claimed, in a Singapore court, the right of first refusal (ROFR) against the Indus OS founders’ stake sale. While PhonePe termed the development an “unfortunate bad faith stalling tactic”, Affle has claimed that the company has not signed any binding term sheet with PhonePe. Suits and counter-suits followed. And the deal is now mired in murkiness, with a long legal battle seemingly in the offing.

The roots of this conflict lie in the motivations and ambitions of three parties—the founders of Indus OS, the purported acquirer PhonePe, and Indus OS’ existing investors.

The Founders

Founded in 2013 by IIT alumni Rakesh Deshmukh, Akash Dongre, and Sudhir B, Indus OS cycled through multiple pivots before finding its raison d’etre. It finally found its purpose as a local language app marketplace, primarily targeting Indians beyond India’s large cities.

The company claims claims CNBC TV18 PhonePe set to acquire Indus OS for $60 million Read more a reach of 100 million users and 400,000 India-centric developers.

AUTHOR

Sumanth Raghavendra

Sumanth is a serial entrepreneur with more than eighteen years experience in running startups. He is currently the founder of Deck App Technologies, a Bangalore-based startup attempting to re-imagine productivity software for the Post-PC era. Sumanth’s columns appear regularly in leading publications. He holds MBA degrees from the Indian Institute of Management, Bangalore and Thunderbird, The American Graduate School of International Management, USA.

View Full Profile

Read this story. Subscribe Now

This story is available across both editions. Subscribe to the one that’s most relevant for you. Questions?

 

Premium

  • 5 original and reported longform business stories every week
  • Access to ONLY India edition
  • Close to 250 exclusive stories every year
  • Full access to over 5 years of paywalled stories
  • Pick up to 5 premium subscriber newsletters
  • 4 original and reported longform business stories each week
  • Access to ONLY Southeast Asia edition
  • Close to 200 exclusive stories every year
  • Full access to all paywalled stories since March 2020
  • Pick up to 5 premium subscriber newsletters

Rs. 2,750 /year

$ 120 /year

India Edition
Subscribe Subscribe
Most Asked For

Borderless

  • 8 original and reported longform business stories each week
  • Access to both India and Southeast Asia editions
  • Close to 400 exclusive stories every year
  • Full access to over 5 years of paywalled stories across India and Southeast Asia
  • Unlimited access to all premium subscriber newsletters
  • Visual Stories

Rs. 4,200 /year

Subscribe
 

Echelon

  • 8 original and reported longform business stories each week
  • Access to both India and Southeast Asia editions
  • Close to 400 exclusive stories every year
  • Full access to over 5 years of paywalled stories across India and Southeast Asia
  • Unlimited access to all premium subscriber newsletters
  • Visual Stories
  • Bonus annual gift subscription
  • Priority access to all new products and features

Rs. 8,474 /year

Subscribe
Or

Questions?

What kind of subscription plans do you offer?

We have three types of subscriptions
- Premium which gives you access to either the India or the Southeast Asia edition.
- Borderless which gives you complete access to The Ken across both editions
- Echelon which gives you complete access to The Ken across both editions along with a bonus gift subscription

What do I get if I subscribe?

The Premium edition gives you access to stories in that edition along with any five subscriber-only newsletters of your choice.

The Borderless and Echelon subscription gives you complete access to The Ken across editions and unlimited access to as many newsletters as you like.

What topics do you usually write about?

We publish sharp, original and reported stories on technology, business and healthcare. Our stories are forward-looking, analytical and directional — supported by data, visualisations and infographics. We use language and narrative that is accessible to even lay readers. And we optimise for quality over quantity, every single time.

Our specialised subscriber-only newsletters are written by our expert, award-winning journalists and cover a range of topics across finance, retail, clean energy, cryptocurrency, ed-tech and many more.

How many newsletters do you have?

We are constantly adding specialised subscriber-only newsletters all the time. All of these are written by our team of award-winning journalists on a specialised topic.

You can see the list of newsletters that we publish over here.

Does a Premium subscription to your Indian edition get me access to the Southeast Asia edition? Or vice-versa?

Afraid not. Each edition is separate with its own subscription plan. The India edition publishes stories focused on India. The Southeast Asia edition is focused on Southeast Asia. We may occasionally cross-publish stories from one edition to the other.

We recommend the Borderless or the Echelon Plan which will give you access to stories across both editions.

Do you have a mobile app?

Yes! We have a top-rated mobile app on both iOS and Android which allows you to read on-the-go and has some amazing features like the ability to bookmark stories, save on your device, dark mode, and much more. It’s really the best way to read The Ken.

Is there a free trial?

You can sign up for a free account to experience The Ken and understand our products better. We’ll send you some free stories and newsletters occasionally, and you can access our archive of previously published free stories. You can stay on the free account as long as you’d like.

The vast majority of our stories, articles and newsletters can be accessed only by a paid subscription.

Do you offer any discounts?

Sorry, no. Our journalism is funded completely by our subscribers. We believe that quality journalism comes at a price, and readers trust and pay us so that we can remain independent.

Do you offer refunds?

No. We allow you to sample our journalism for free before signing up, and after you do, we stand by its quality. But we do not offer refunds.

I am facing some trouble purchasing a subscription. What can I do?

Just write to us at [email protected] with details. We’ll help you out.

I have a few more questions. How can I reach out to you?

Sure. Just email us at [email protected] or follow us on Twitter.