Make in India or Shame in India : A Startup Story

This was a write up sent by one of our readers. He is an experienced and talented senior professional who witnessed some of the happenings narrated here first hand.

Names and identities have been changed.  The statements in the article are of the person who wrote the article, and not verified by us.

But the general fact remains that start ups and their sky high valuations are part of an elaborate financial network exploiting our country.  With successive governments after 1990s opening up Indian economy to unrestricted entry of foreign capital, India has become one of the hot spots for startup investments. Media hype the start ups as the next big thing for growth and employment generation.  Stock market speculators bet on Indian founders as having magical wand to increase the valuations over night.

What is the truth?

This case gives a slice of one such phenomenon. This company is in the race to capture the market for digital transactions and reported a loss of Rs 67.99 crore in year ended March 2016 as reported in their website. Even Modi’s demonetization which dealt a sever blow to farmers, small traders and small business did not lift this company.

Start up scene or shame in India : Founders making money at the cost of employees

How startups have been able to increase their valuation multi-fold within an unimaginably short span of time!!! Have you ever thought about it?

Some may think that we have lots of uncaptured youth power/energy which is now bringing a positive change to the economy. But if you probe deeper into stories of several founders who have been booked in cases of misappropriation and unethical practices, the reality will sink in. We will understand that it was all sham and myth just to befool people

Let us look at one such story.

Start and prepare

Citrus Pay

Citrus Pay went on a hiring spree just to increase their valuation by setting up product, analytics and engineering functions.

A FinTech startup Citrus Payments based out of Mumbai was working with only 50 employees in 2014. In the race to increase its valuation and selling the company at much higher price than its actual value, the company founders accelerated hiring and the company became 250 employees company within a short span of 1 year.

They went on a hiring spree just to increase their valuation by setting up product, analytics and engineering functions. In this entire process they acted in a very secretive manner, kept employees in the dark (regarding ESOPs, bonus, appraisal process) and did not enter into clear cut employment agreement. They roped in high end executives by making false promises that there would be ample opportunity for growth in terms of work, salary, bonus, ESOPs, even as the founders were looking to exit via a sale.

Get acquired and build media hype

In October 2016, Citrus Payments got acquired at a much higher valuation than its actual value on the pretext of great leadership team, new products, customer base etc. The news of acquisition was widely covered in leading newspapers as “USD 130 million acquisition of Citrus Pay, by PayU”. PayU is a 100% owned payments arm of Naspers Group of South Africa.

Soon after this the founders started circulating news about their employees becoming “Crorepati” overnight as their share values have increased. It was reported that a peon of the company earned Rs 50 lakh as his shares got vested as a result of acquisition. Both the founders Amrish Rau and Jitendra Gupta gave several interviews and publicized this to demonstrate how different they are. They planned the exit of Nitin Gupta, CEO of PayU and took over the reins of the PayU India.

It seldom happens that when a smaller company with 1/3 the GMV of larger company actually topples the leadership of larger player and in this case it was done by CitrusPay. The rationale given was that Citrus had an efficient capital deployment and strong leadership and path breaking products such as P2P, LazyPay and Selfie, while PayU was just a traditional PSP. Infact Jitendra Gupta was also featured in Forbes under 40 in India for the wonderful feat he had achieved.


CitrusPay founders

Both the founders Amrish Rau and Jitendra Gupta gave several interviews and publicized this to demonstrate how different they are

However, once the company got acquired by PayU (100% owned by Naspers Group), Citrus Payments started short paying their vendors and employees. They initiated cost cutting drive as they started facing cost/budget constraints. When the peon of the company allegedly got Rs 50 lakh out of this deal, the high end executives were paid less than 5% of their salaries.

The company started giving low rating to its employees without following any process/ procedure. This was done solely for the purpose of cost cutting and addressing the problem of cost constraint faced by the Company.

While during the merger they kept on harping about being people centric and building strong leadership, Citrus Pay and PayU saw departures of so many key executives including the CEO, CFO, VPs etc in all departments, that it became a laughing stock on companies internal inFeedo. They started giving these exits the color of non performance.

An employee who was rock star just before acquisition, turned into a non performer suddenly. Obviously that is without substantial facts and evidence and without following any process. This led to further departures from Selfie, LazyPay, P2P products of Citrus and from their enterprise and money business of PayU.

Naspe”s dream to win FinTech war turned into a nightmare


PayU has not been able to capitalize on the demonetization as all the other players such as a MobiQuick, PayTM.

Naspers Group had great ambitions to win the FinTech war in India. However it could not be more than a pipe dream when they hardly have any management capabilities and leaders with tech or product experience.

Just see the departure of executives and staff at all levels in PayU and Citrus in the last one year and answer would be clear that the people who were being forced to leave were the one hired just a year with so much fanfare.

It was evident that even after the merger PayU has not been able to capitalize on the demonetization as all the other players such as MobiQuick, PayTM to name a few did. Both PayU and Citrus have wallets that no one cares about. Only the founders and investors of Citrus Pay have been the beneficiaries in the whole process where as employees and vendors are left high and dry.

Many senior executives who were given ESOPs just took pennies over the deal as they were all let go immediately and not all of their stock got vested. The company who claims that they paid Rs 50 lakh to a peon has not even paid quarter of it to its senior most executives who were shown as leading vital functions of the company be it Engg, Product, Sales etc. Not only this they have also managed to save bonus from executives by either firing them before the due date or simply not paying the same citing performance reasons.

Such M&A needs to be investigated by authorities and employees rights could be preserved. When employees are let go they should be paid severance and bonus alongwith the ESOPs that were promised as this was a good exit and not distressed sale as is case with other Indian startups.

Caution : Beware of startup dreams

– Anubhav

Some additional information


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