Who Is Rahul Yadav, The IIT Dropout Accused Of Using His Startup's Rs 276 Crore Funding For Lavish Living?

From being considered a child prodigy to dropping out of IIT Bombay, turning into an entrepreneur and getting fired, to now being accused of nearly Rs 280 crore fraud, Rahul Yadav's life has been a rollercoaster.

The co-founder and former CEO of real estate search portal Housing.com was sacked after high drama in 2015, and now an investor in Rahul¡¯s other startup wants to know how he burnt its funding in crores.

zee

As per ET, Yadav had said a few years ago "But now, I won¡¯t do such a thing. If I set up a company again, I won¡¯t get into a spat with investors. If there are problems, you have to talk them out. And if things don¡¯t work even then, you part ways amicably. Now, I¡¯ll do a very good transition."

But now, history seems to be repeating itself.

Allegations Against Rahul Yadav

A forensic audit of his startup by his investor, aimed at probing financial transactions and related-party activities, hints at the investor smelling mischief in the books. There are reports of Yadav splurging money on luxuries while the employees go unpaid. He reportedly maintained a luxurious lifestyle such as owning a Mercedes-Maybach and hired a boardroom at the Taj Land's End for Rs 80,000 per day. His startup burnt over Rs 276 crore in less than 18 months, while over 150 employees have not been paid since November last year.

Consumer Internet group InfoEdge has initiated a forensic audit of its portfolio company 4B Networks founded by Rahul Yadav for not disclosing details of financial transactions and related-party activities when asked for by the investor. In a stock exchange filing, InfoEdge said it hired Deloitte to conduct a forensic audit of the property-tech startup. Info Edge had written off its equity investment of Rs 276 crore in 4B Networks during the December 2022 quarter citing ¡°excessive cash burn, prevailing liquidity issues and significant uncertainty towards funding options¡±.

forbes

Early Years Of The Prodigy

Yadav, an IIT Bombay dropout, was considered a child prodigy who took little interest in formal education but could teach himself even the most complex subjects. Hailing from a small town in Rajasthan, Yadav had planned his first entrepreneurial venture in a hostel room along with several of his batchmates. While IIT hostel rooms are known to be incubators of bright ideas that later turn into reality, Yadav had such a strong belief in his idea that in its pursuit he left IIT without completing his degree.

The idea for Housing.com, the website that brought tech to house search, emerged from Yadav's and his friends' difficulty in searching for accommodation in Mumbai. Housing.com was launched in 2012 when Yadav was just 23 years old. Two years later, it shot to fame as one of India's startup success stories after Japan's SoftBank led an investment of $90 million (Rs 550 crore) in December 2014, valuing it at Rs 1,500 crore, as per ET.

A few months later, Yadav, who was seen as a startup whizkid whose middle-class, small-town background and maverick ways endeared him to many, hit a rough patch that made him the bad boy of Indian startups.

Also Read: Woman's Brutally Honest Answer To Startup's Job Offer Goes Viral

When Things Turned Ugly

file

India's startup ecosystem was presented with an unprecedented spectacle after it emerged that Yadav had fired off an angry and threatening email to Shailendra Singh, a managing director of the country's largest venture capital firm Sequoia Capital, and copied hundreds of his firm's employees on it in early 2015. Yadav addressed Singh as ¡°dude¡± and accused him of ¡°inhuman and unethical things.¡±

The email reportedly surfaced on the question-and-answer platform Quora, prompting a rare public reply from Singh on Quora saying he was ¡°deeply hurt.¡± He said Yadav¡¯s email to him was possibly triggered by Sequoia hiring a Housing.com employee as an analyst.

¡°I just came to know you personally are completely after Housing¡¯s employees and are brainwashing them to open some stupid incubation. If you don¡¯t stop messing around with me, directly or even indirectly, I will vacate the best of your firm,¡± Yadav said in his email to Singh, which was copied to Housing¡¯s 1,500 employees.

He also warned: ¡°Also, this mark(s) the beginning of the end of Sequoia Cap in India. Try me :)¡±

Soon after, following rumours that the board was thinking of replacing him, Yadav sent a letter to his company¡¯s board in which he wrote: "I don't think you guys are intellectually capable enough to have any sensible discussion anymore. This is something which I not just believe but can prove on your faces also!" But a few days later Yadav apologised for his ¡°unacceptable comments¡±. The board accepted his apology, allowing him to continue as CEO.

Yadav came up with another surprise by gifting all his shares in the company, which he claimed were worth about Rs 200 crore, to his employees, saying he was "too young to worry about money". He also challenged his critics, including Zomato¡¯s Deepinder Goyal and Ola¡¯s Bhavish Aggarwal, to follow his lead. Yadav owned a 4.57% stake in the company. Nexus Ventures owned 19%, SoftBank 32%, and Helion Ventures and Falcon Edge about 10% each.

When Yadav Was Finally Fired

Yadav was finally sacked after an email he sent to employees was leaked. In it, he wrote that ¡°to have some fun¡±, he had given contradictory answers to various journalists who had called him to find out whether Housing.com was being taken over. The Housing.com board said his behaviour towards investors and media was not "befitting" of a CEO.

The series of dramatic events put Yadav in a harsh spotlight. There was even the talk of his life set to be chronicled in a web series by Amazon Prime in India.

Yadav later realised where he had gone wrong. In an interview with Forbes in 2019, Yadav said he was "way too young at that time and it was immature behaviour."

He said he was "a leader in college and then a co-founder of Housing.com, always used to being the single point of authority. Even if he was wrong, no one was questioning him. In such situations, leaders got delusional a bit and took wrong calls with confidence."

Also Read: How A Science Genius Lost Millions In The Stock Market

For the latest and more interesting financial news, keep reading Indiatimes Worth. Click here.