Saarthi founder takes legal action against acquirer Classplus
The allegations include cheating, extortion, threat to life, criminal breach of trust, mental harassment, criminal intimidation, defamation, theft of immovable property, criminal conspiracy, and misappropriation of funds.
Edtech startup Saarthi's founder Chirag Kapil has taken legal action against Classplus, while at least one investor has lodged a police complaint against Classplus founders, alleging charges of cheating and breach of trust arising from a complicated acquisition process.
As per Saarthi's statement, the allegations include cheating, extortion, threat to life, criminal breach of trust, mental harassment, criminal intimidation, defamation, theft of immovable property, criminal conspiracy, and misappropriation of funds.
The lawsuit initiated by Kapil is targeted at Bunch Microtechnologies Pvt Ltd, the operational entity behind the edtech startup, and one of the police complaints filed by an investor explicitly cites Classplus and its founders—Mukul Rustagi and Bhaswat Agarwal—along with Chief Financial Officer Sankalp Aggarwal.
This development was first reported by The Morning Context.
SaaS startupoffers tools to educators and coaching centres for crafting customised applications, while has established a live educational tournament platform tailored to vernacular languages.
In late 2021, the founders of Saarthi and Classplus engaged, leading to the introduction of an acquisition proposal in October with seemingly advantageous terms for Saarthi.
Following this, Kapil assumed a crucial executive role in Classplus, yet he was unexpectedly terminated a few weeks later, as claimed by Saarthi in its statement. This action triggered a series of events that led to the ongoing legal proceedings.
“Furthermore, investors associated with Saarthi have not received their stipulated agreements or the corresponding equity they were entitled to,” the statement read.
By February 2022, even before formalising any official agreements, Classplus allegedly had access to Saarthi's proprietary information, workforce, intellectual property, and database.
"Saarthi was a pre-revenue company when we conducted the deal. Both founders of the company got cash payouts from Classplus on day one of their journey with us. Chirag left in Aug 2022 while, Saransh, the other co-founder, stayed for more than a year, till May 2023. There is no merit in the allegations made against us due to the same reasons and facts," Classplus said, in response to YourStory's queries.
According to the lawsuit, the financial terms included an incentive of about $30 million for the founder and co-founder, along with equity worth $350,000 for existing investors, or four times the value of their investment.
The list comprises investors, including Axilor, Vinod Sood (initial investor in OYO), Paras Batra and Ayush Banka (Founders of Leaf), Ritesh Malik (Founder of Innov8), Faad Network, Rahul Dalmia (Polygon), and Sricharan Iyengar (Founder of Topper TV).
“Classplus’ failure to pay us (Saarthi's investors), despite numerous attempts to resolve the issue, is more than just negligence—it's a glaring sign of bad faith. We investors were left abandoned and deceived, and we demand immediate action. This isn't just business; it's a matter of principle, and we won't rest until it's rectified,” Leaf’s Banka said.
Founded in 2015, Classplus, which achieved a valuation surpassing $600 million in 2022, is backed by venture capital firms Tiger Global, Peak XV's Surge, Blume Ventures, Alpha Wave, and GSV Ventures.
Saarthi and Classplus have presented their respective responses in the Delhi High Court, with the hearing set for September.
(This copy has been updated to add Classplus’ comment and rectify a fact.)
Edited by Suman Singh