Investing in Rahul Yadav's 4B Networks was a mistake: Info Edge’s Sanjeev Bikhchandani

The Info Edge founder says it is a good time to take bet on young companies as valuations have become reasonable and round sizes have shrunk

Investing in Rahul Yadav-founded realty tech startup 4B Networks was a mistake, Info Edge founder and executive vice chairman Sanjeev Bikhchandani said, speaking to analysts after the company reported its Q1Fy24 results on August 11.

This comes weeks after the tech investor initiated a forensic audit into the portfolio startup for not sharing business information, and is also approached the Delhi High Court and will go into arbitration with the startup, starting August 14. For the quarter ending March 31, 2023, the company had written down its entire investment in the startup.

"Sometimes we make mistakes. Investors do go wrong... 4B was a mistake. I think we have to admit it. You can't write off Rs 288 crore saying it wasn't a mistake. It was a mistake," said Sanjeev Bikhchandani, founder and executive vice chairman of Info Edge.

"Companies go under but fraud is a different thing," he added.

He added that they have reviewed matters internally, and have checked if they need to change something, tighten due diligence etc.

"What are the signals and indicators and red flags that emerge during conversations with founders where you know there may be a problem, how do we deal with other situations in case anything comes up -- which thankfully so far has not happened," he said.

Read: Rahul Yadav’s 4B Networks didn’t give details to Info Edge despite forensic audit, to go into arbitration

At a time when the funding winter for startups is worsening and investments in the ecosystem have fallen more than 80 percent in H1, Bikchandani said that it is as good a time to take a bet on young companies as valuations have become reasonable and round sizes have shrunk.

"There are plenty of good opportunities, deal flow is strong. The valuations are more reasonable, round sizes are smaller," he said.

Also read: Continue to witness challenging environment especially for IT hiring: Info Edge CEO Hitesh Oberoi

"At the same time, we are taking our time and being cautious simply because there's a new risk and a new risk is will this company be able to get a next round of funding with other investors participating or not?" he added.

Read: Info Edge Q1 revenue rises 14% to Rs 676 crore, net profit down 50% amid weak IT sector hiring