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The inexplicable deceit of Innov8

Before WeWork took a giant dump on the coworking business all over the world, there was a small Indian company that got so lucky, lady luck squirmed.
Innov8

[Following the publication of this article, one of Innov8’s 80-odd former investors wrote in to us, forwarding an email dated 3 July 2018, sent by the company’s co-founder, alleging a range of financial and operational irregularities. Log in or subscribe to read the updated story below.]

[Additionally, after we updated this story with details of Shailesh Gupta’s email to investors, Innov8 founder Ritesh Malik has also provided us with a document, essentially a “To Whom It May Concern” letter. It is reproduced in full in the story along with Shailesh Gupta’s initial email that had been provided to us by a former Innov8 investor. Please log in to see the full article and view the relevant section.]

The investor chuckles. Not the hearty chuckle but one with shades of mirth.

He draws himself closer as if mimicking a secret conversation that must be protected from curious eavesdroppers. But the coffee shop is empty, sans a Bollywood star and his entourage. We are sitting in one corner of the establishment, nestled in the luxury of a five-star hotel with a black coffee and a pure white on the table. Both left untouched. “We made a lot of money in that deal,” he says.

“Really?” This is me.

“Yes. All cash,” he says.

“You are kidding, right? I thought it must have been some stock swap sort of deal with you guys getting OYO’s equity.”

“No, no. Who knows what is the worth of OYO’s share tomorrow? It was all cash.”

“How much?”

“The number is not public but around Rs 220 crore.” That’s over $30 million.

“Wow. Two hundred and twenty crore.”

“Imagine just one month before WeWork filed for IPO.”

“Wow.”

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Illustrations by Swati Addanki. Graphics by Pranav S. 

Correction: An earlier version of this story stated that Ritesh Malik’s parents, Ravi and Renu Malik, took out unsecured loans from Sai Nath Developers. That was based on an incorrect reading of the company’s assets and liabilities. It is the other way round. Ravi and Renu Malik provided loans to Sai Nath Developers. The error is sincerely regretted.

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