appie-office

The office was closed, and the founder wasn’t there.

In May this year, Appie sent out word to the media that it had raised $1 million in bridge funding from HNIs in India and Europe which it said would be used for product launch, customer acquisition and business development. Appie is a two year old company run under Appie Mobiquity Pvt Ltd. The company was founded by Kartik Sanghavi in 2014 and offers a platform for connecting offline stores in a 5km radius of a user who could add items to their cart and get it delivered.

Currently, Appie has both a user facing and a merchant facing Android app, listing 45 lakh products across categories. The user app has installs in the 10,000-50,000 range, and a rating of 4.7, while the merchant app has 1,000-5,000 installs and a 4.8 rating.

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The fundraise of $1 million that never came through

On the 15th of June, Kartik sent out an email to employees stating that due to “certain unforeseen circumstances and broken commitments,” salaries for May and June had been delayed. He added that he had exhausted the ‘planned allocation for this product in October 2015 but had created a runway for another year till December 2016.’ Two investments from which he was exiting were stuck, but he had received commitment for a $1 million investment from HNI investors, which would come in the first and second week of July.

On the 1st of July, Kartik sent an email to the team (the “Appiening team”) that they “are set to course the future of how Mobile, Product Search, Ambient Experiences, Connected experiences will evolve and impact millions of lives.” In that email, he mentioned an investment of Rs 15 crores from the Times Group*, “in terms Ad inventory”, according to which, “the worst case valuation of our company is Rs 82.00 crores.”

In addition, the email mentioned that “this entire pool of ESOPs will continue to increase 5% or even 10% as we grow and so will the opportunity to get more of it. So it is entirely upto the team to make sure that how much we can jointly not only make this 1% grow but also how the increased amount of ESOP pool can be rewarded more and more to a smaller team.”

This email was sent to us by Appie employees, and Mahesh Sanghavi (Kartik’s father) was not in a position to comment on it. MediaNama contacted Times Internet for a clarification, and are waiting for a response from them. Typically, in case of ad inventory deals, the money invested by the media company (in exchange for equity) is largely (or entirely) used to buy advertising in the media company itself. Thus it is unlikely that the money invested “in terms Ad inventory” would have been used for anything other than buying ads. This type of a deal is not uncommon, and a few years ago, we got a sample of the terms of an ads for equity deal, via an IPO filing by Planet41.

Several employees told MediaNama that around the 7th of July, Kartik Sanghavi stopped going to the company’s office, which is on the fourth floor in a Kewal Industrial Estate building at Senapati Bapat Marg in Lower Parel in Mumbai. MediaNama tried contacting him over the phone, but to no avail.

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Multiple company employees have told MediaNama that they still haven’t been paid salaries for May, June and July. MediaNama met these Appie employees (across functions) in Mumbai last week and visited the company’s Lower Parel office which was closed at the time. According to employees, the office has been closed since the 31st of July. On the 3rd of August, the company’s HR messaged employees via WhatsApp saying that the office will remain closed until further notice.

The struggle to pay salaries

Appie, we were told, has (or had) a team of 30 people: 5 front end Android developers, 6 on the backend, 3 in the design team, 4 for onsite sales, 2 in marketing, 1 retail head, 2 in testing and 2 in HR other than a ‘management team’ of 4.

According to data from the Registrar of Companies, Kartik Sanghavi owns 5,000 shares of Rs 10 each, while Malti M Sanghavi, a director at Appie, owns 5,000 shares worth Rs 10 each. On the 20th of May this year, Appie increased its existing share capital from Rs 100,000 to Rs 200,000, and doubled its share base to 20,000. According to filings, in December 2013, Ketan Parmar was appointed as an additional director on Appie’s board, 4 months after the company was founded. On the 20th of June 2016, Parmar resigned from the company, paving way for Mahesh Sanghavi, Ketan’s father, to take his place as an additional director of the company. Parmar is on Pune based real estate agency Vermont Realty’s board, a company in which Mahesh Sanghavi has interests: he confirmed to MediaNama that it is his personal business.

Appie employees told us that Sanghavi went to Pune on the 20th or 21st of July to arrange for money to pay salaries.

On the 9th of August, a group of around 20 employees went to the police station at NG Marg in Lower Parel, Mumbai, to file a complaint. The following day (10th August), some of the employees went to a different police station namely the NM Joshi Marg police station. At this time, the police called up Mahesh Sanghavi, and asked him to pay the salaries. Employees say that at this time, Sanghavi said that he would pay by the 16th of August. The police then told the employees that this was a labor court issue.

On the 17th of August, Mahesh Sanghavi told MediaNama, “We’re going to pay their (employee) salaries. They’ve worked hard so they have to be paid. The funding and finance market is pretty bad right now as you might know, but we’ve worked hard to bring the company through these 2 years. It’s only in the last 2 months that we’ve been facing a problem. I don’t want to disappoint anyone.”

“5-6 employees who were working at the bottom level, or hand to mouth, we arranged to pay them Rs 10,000-30,000 after collecting money,” Sanghavi said, adding, “there’s no cause for any tension or worry, we’re going to pay everyone,” he said.

On the 21st of August, he sent a message on the company WhatsApp group stating that he’d pay employees one month’s salary in cash by the 22nd of August conditional to them resigning. Sanghavi confirmed the authenticity of the message to MediaNama.

Yesterday, some of the employees told us that no one had been paid. Sanghavi, though, said that 50% of the money due had been arranged, and he intends to pay everyone in one go.

Last week and earlier this week, Appie’s website displayed a message: “Error 403 – this web app is stopped.” It’s back live today, and while the sites mentions that the company is hiring, that is unlikely to be the case.

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Editing by Nikhil Pahwa

Disclosure: Times Group is an advertiser with MediaNama