Directors have been talking regularly in recent days to consider the future of Bose and Zilingo itself, said the people, asking not to be identified because the discussions are private. Bose, whose current suspension runs through May 5, has pressed the board to clarify her status in part because she is concerned the company is growing directionless, the people said.

The board has not yet decided who will replace Bose, though one option discussed is to appoint interim leadership, possibly including senior executives and investors, the people said. The private investigative firm Kroll is conducting a probe of Zilingo’s bookkeeping and is aiming to finish soon. 

Bose has denied any wrongdoing and has hired an attorney to fight back against what they have described as a “witch hunt.” She has grown frustrated with the conflicts and has begun to realize she is unlikely to return as CEO, according to one of the people.

In a statement to Bloomberg, Bose said she is “fully committed to cooperating with the board in the investigations” and that “one thing we all agree on is that whenever there are credible complaints, as board members we are obligated to look into them and do what is best for the company.”

Zilingo did not immediately respond to requests for comment.

Zilingo, backed by Sequoia Capital India and Temasek Holdings Pte, had been one of the highest-profile startups to emerge from Singapore until revelations about its accounting probe and the CEO’s suspension emerged this month. Temasek, also based in Singapore and backed by its government, has expressed concern the meltdown is tainting its reputation and urged the company to fix the situation.

“We expect our portfolio companies to abide by sound corporate governance and codes of conduct and ethics. We are therefore supportive of the board’s investigation into the complaint as part of good governance, to safeguard the interests of the company,” Temasek said in its own statement. 

Zilingo, which supplies technology to apparel merchants and factories, had been trying to raise as much as $200 million with help from Goldman Sachs Group Inc. when prospective investors began to question its financial practices. The concerns involve how the startup accounts for revenue on a platform used by thousands of small merchants, as well as the consolidation of its Indonesia operations, the people said. 

The company raised $226 million at a valuation of $970 million in 2019 when Bose was 27 years old. But the COVID-19 pandemic took a toll on its business: Revenue dropped by about a third in fiscal 2021 to roughly $40 million. Bose took a pay cut of about 30% as a result, while the company laid off staff.

The clash between Bose and the board has escalated in recent days as executives and directors sort through who is responsible for the startup’s financial state, the people said. Bose has argued that she is getting blamed for decisions and practices that were well known by senior managers and directors. 

In particular, she has made the case that Sequoia and its Managing Director Shailendra Singh were intimately involved in Zilingo’s operations, the people said. She has said that she and co-founder Dhruv Kapoor were young founders who leaned on the expertise of investors like Sequoia, which owns about 25% of the startup and is considered one of the top venture firms in the world, they said. 

Singh participated in many discussions about daily operations, often communicating with Bose, the people said. He also joined discussions with Goldman about fundraising and helped bring in other investors.

Sequoia said a statement that its team routinely works with portfolio companies, but it “operates on information shared by the companies.” The firm, along with other investors, was “shocked and disappointed by the allegations that surfaced in March 2022.”

Sequoia said on behalf of the board that any question of change in management is “speculative and premature at this stage.”

Singh and two other directors have resigned from Zilingo’s board in recent weeks. Sequoia India’s Sandeep Kher took over his director post at Zilingo.

Sequoia India posted an unusual mea culpa on its website on Sunday, following troubles at several of its startups including Zilingo.

“We usually stand shoulder to shoulder with our founders during hard times. But on some rare occasions, we wake up feeling disappointed. Our worst days are when we hear about breaches of integrity or ethics in the portfolio. This is the stuff that pains us deeply. And it’s time we speak about this,” said the post, which did not name any individual partners and was attributed only to “Team Sequoia.”

“Recently some portfolio founders have been under investigation for potential fraudulent practices or poor governance. These allegations are deeply disturbing,” it read. “We need some guardrails that we, as an ecosystem, sign up to, so that a few errant founders don’t create big setbacks for the wider ecosystem at large.”

Sequoia’s Singh had raised the idea of replacing Bose as far back as January of 2021 and had suggested Ananth Narayanan, the former CEO of Myntra, as a successor, the Morning Context reported earlier. Bose, who had worked at Sequoia before co-founding Zilingo, fought back against that idea. 

Bose has made the case that Sequoia and other investors are now using the pretext of accounting to oust her unfairly, the people familiar told Bloomberg. At least some of the bookkeeping practices at Zilingo are technical decisions that are typically considered judgment calls at startups.

One example is how a startup accounts for revenue when it provides substantial incentives to customers. If, for example, a customer gets a 50% discount on a $100 dress, the company may count that as $100 in revenue and $50 in expenses, effectively making its revenue look bigger. A more conservative approach would be to book only $50 in revenue.

Zilingo has made similar accounting decisions that make its revenue look larger, but Bose has argued the company’s finance department is primarily responsible for such moves, the person said. 

The board has argued that as Zilingo emerges from the COVID downturn it is better to press the reset button with a new CEO, one person said. While Bose feels loyalty to many employees at the company, she has grown disappointed that directors have not backed her with sufficient support, another person said.

“I’m committed to, above all, acting in the interests of all of our customers, our hundreds of employees, our shareholders and their LPs and together with the cooperation of the board, we will find the most constructive path forward,” Bose said in her statement, the first she has made since the investigation began. “I hope that the media and social media can give us some privacy as we resolve this in the best way possible for the company, its stakeholders and the entire ecosystem.”