🤯 The $31M fraud that killed BluSmart overnight

How BluSmart went from the biggest EV ride-hailing platform to the biggest financial scandal in India

Author

Admond Lee
May 18, 2025

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Hey Founders,

Welcome to The Runway Ventures — a weekly newsletter where I deep dive into failed startup stories to help you become the top 1% founder by learning from their mistakes with actionable insights.

Today’s story is about how BluSmart went from the biggest EV ride-hailing platform to the biggest financial scandal in India. Let’s get to it! 🚀

Today at a Glance:

  • ☠️ 1 Failed Startup → BluSmart

  • ⚠️ 2 Mistakes → Integrity & corporate governance have left the chat

  • 🧠 3 Lessons Learned → Your integrity is everything

  • 🔗 The Runway Insights → How Perplexity grows and outcompetes Google

  • 💰 Southeast Asia Funding Radar → BrioHR raises $6.5M (Series A) to revolutionise human resources for companies across SEA

☠️ 1 Failed Startup: BluSmart

🚀 The Rise of BluSmart

🇮🇳 Founded on 14 January 2019 by the Jaggi brothers (Anmol Singh Jaggi, Puneet Singh Jaggi) and Punit K Goyal, BluSmart was launched as India’s first all-electric ride-hailing service.

😷 If you've ever been to Delhi or any major Indian city, you know the air pollution situation is absolutely brutal. Traditional ride-hailing services like Uber and Ola were part of the problem, not the solution.

"What if we could offer rides that don't pollute?"

That was essentially how BluSmart was born 🧠

  • The Problem — 😷 India’s ride-hailing scene was dominated by petrol/diesel cars — causing pollution, clogging roads, and saddling drivers with high fuel bills.

    • Besides, passengers often got cancelled or charged with surge pricing when booking an Uber during rush hour.

  • The Solution — 🚙 BluSmart provided India’s first EV ride-hailing services with fixed pricing, zero emissions, and no cancellations.

    • In a market where riders were fed up with drivers canceling trips or demanding extra money, this was seriously appealing.

⚡️ In short, BluSmart built India’s first end-to-end EV ride-hailing platform and supporting charging-infrastructure network, offering app-based electric cab rides across major cities.

The vision? To help transform Indian cities by building a holistic and comprehensive electric on-demand mobility platform.

🤝🏻 Within their first month, BluSmart had already partnered with Mahindra & Mahindra to get their initial EV fleet on the road.

By September 2019, they'd secured their first $3 million in funding, with even Bollywood star Deepika Padukone's investment office backing them.

⚡️ By 2024, BluSmart was king:

  • Partnered with Jio-BP to build urban charging stations

  • Signed an MoU with Tata Motors to deliver 10,000 EVs

  • Teamed up with Tata Power for clean energy sourcing

  • Had over 8,000 EVs in its fleet

  • ₹390 crore in annual revenue (up 143% from 2023!)

  • 25 million clean trips completed

  • 25,000–30,000 rides daily across Delhi, Mumbai, Bengaluru

  • Raised $168 million at a valuation of $335 million

  • Backed by BP Ventures, cricketer MS Dhoni, and even a Zurich climate fund

🤑 BluSmart was on every “Top 10 Green Startups” list. By early 2025, they were reportedly in talks for another $50 million (Series B) to fund their Mumbai expansion.

Users raved on LinkedIn. Investors threw money.

Life was good…

📉 The Fall of BluSmart

… until it wasn’t.

Because behind the scenes, shit was hitting the fan as BluSmart was just a house of cards built on family ties.

🤯 Everything collapsed when SEBI probed Gensol Engineering (an affiliate financing BluSmart’s EV leases) and found that roughly ₹262 crore ($31 million) in loans earmarked for 6,400 EVs had been diverted for personal luxuries — golf sets, a luxury apartment, international trips — by the Jaggi brothers (OMG).

(🚩 Red Flag) Interestingly, Gensol Engineering — a publicly listed solar energy and EV leasing company — is also run by Jaggi brothers. And this is where things got complicated.

📌 Here’s what happened to BluSmart:

❝

What has been witnessed in the present matter is a complete breakdown of internal controls and corporate governance norms in Gensol, a listed company. The company's funds were routed to related parties and used for unconnected expenses, as if the company's funds were promoters' piggy bank.

— shared by SEBI in its order

👋🏻 Bye UBER (No cancellations + no surge pricing + zero emissions)

  • 2019

    • Jan — 🚙 Founded by Jaggi brothers (Anmol Singh Jaggi, Puneet Singh Jaggi) and Punit K Goyal. Partnered with Mahindra & Mahindra to launch initial EV fleet.

    • Sep — 💰 Raised $3 million (angel round) backed by JITO Angel Network and Deepika Padukone's Investment Office.

  • Aug 2020 — 💰 Secured $7.8 million (Pre-Series A) from IPV and Venture Catalysts.

  • 2021

    • Jun — Partnered with Jio-BP on World EV Day to build charging infrastructure across India.

    • Sep — 💰 Raised $25 million (Series A) from BP Ventures.

  • 2022

    • May — 💰 Raised another $25 million (Series A1) from BP Ventures and Green Frontier Capital.

    • Jun — Signed MoU with Tata Motors to deliver 10,000 EVs

    • Jul — Received Verra accreditation for carbon emissions

  • Dec 2023 — 💰 Raised $66 million through 2 rounds from existing investors.

  • 2024

    • Jan — Introduced surge pricing (promise broken huh?)

    • Feb — Partnered with Tata Power for clean energy sourcing

    • Jul — 💰 Raised $24 million (Pre-Series B) with investors including MS Dhoni's Family Office.

  • Jan 2025 — Entered discussions for $50 million (Series B) to expand into Mumbai.

🥵 Integrity & corporate governance have left the chat

  • 2025

    • Feb — Gensol’s credit rating tanks. SEBI investigates fund diversion.

    • Mar — Fleet crisis began.

      • When Gensol’s debt hit ₹470 crore in 2024, credit agencies downgraded it to “junk”. They tried selling 3,000 EVs to Refex Green Mobility, but the deal collapsed in March 2025.

      • BluSmart lost 1/3 of its fleet overnight.

      • BluSmart delayed salaries and drivers protested on Twitter.

    • 15 Apr — 💣⚠️ The ticking time bomb finally exploded.

      • 🤯 India's Securities and Exchange Board (SEBI) alleged that Jaggi brothers (Anmol Singh Jaggi and Puneet Singh Jaggi) were diverting ₹262 crore ($31 million) of loans from Gensol (which they owned) to buy luxury apartments and golf equipment (more to be shared below).

      • 🚨🚨 SEBI also banned Jaggi brothers from holding directorships and accessing public markets over findings of diverted EV-loan funds (exposing ₹262 crore fraud).

      • 💸 At the same time, Gensol was hit by credit downgrades and debt defaults (from BluSmart), forcing a sale of 3,000 EVs and undermining BluSmart’s asset base.

      • This regulatory bombshell shook both companies to their cores. The very founders who had built BluSmart's eco-friendly vision were now embroiled in a serious financial scandal.

    • 17 Apr — 😟 Suspended ride-hailing services and the BluSmart app went dark, effectively pausing its entire service.

      • BluSmart defaulted on bond payments.

      • ~10,000 drivers and 800 employees were left in limbo.

      • Wallet refunds were delayed.

      • Drivers and employees were unpaid.

    • 23 Apr — Appointed Grant Thornton for a full forensic audit to trace fund flows.

      • Meanwhile, multiple executives resigned.

      • The CEO, CTO, and VP quit.

    • May — 💰🤔 Investors proposed $30 million rescue, but only if Anmol Jaggi would resign.

      • As of today, BluSmart’s final chapter is still being written subject to SEBI action and the potential injection of new funding to keep the company alive.

⚡️ BluSmart identified a perfect opportunity — Indian cities desperately needed cleaner transportation options, and customers wanted reliable service without the headaches of traditional ride-hailing apps. They built impressive partnerships, secured significant funding, and achieved remarkable growth.

🪢 But the tangled relationship between BluSmart and Gensol Engineering created a fatal flaw in their foundation. The founders' decision to create preferential leasing terms between their two companies ultimately triggered regulatory intervention that put both businesses at risk.

🙏🏻 Moral of the story?

  • No matter how noble your startup's mission might be, governance matters.

  • Transparent business practices and proper management of conflicts of interest aren't just legal requirements — they're essential safeguards for your company's long-term sustainability.

Want to learn more about BluSmart’s downfall?

⚠️ 2 Mistakes

(Left→Right) CTO Rishabh Sood, cofounders Anmol Singh Jaggi and Punit Goyal, CBO Tushar Garg and CEO fleets Anirudh Arun. Sood, Garg and Arun have quit BluSmart.

Mistake 1: Integrity has left the chat

I was utterly shocked when I looked at how Jaggi brothers used company funds for personal use.

🤯 Here’s TLDR:

  • BluSmart’s co-founders, Anmol and Puneet Jaggi, stood accused by SEBI of siphoning off loans raised by their affiliate, Gensol Engineering, meant to lease EVs to BluSmart.

  • Between FY22 and FY24, Gensol availed term loans totalling ₹977.75 crore from IREDA and Power Finance Corporation, ostensibly to procure 6,400 electric vehicles for BluSmart’s fleet.

  • ❓ Of those loans, ₹663.89 crore was booked for the EV leases, yet Gensol’s records show it purchased only 4,704 vehicles for ₹567.73 crore.

  • 🤦🏻‍♂️ This left ₹262.13 crore ($31 million) unaccounted for — funds that SEBI says were diverted into personal expenses and shell-company transactions benefiting the promoters and related entities.

  • 💰 Beyond the vehicle-purchase shortfall, SEBI’s interim order also flagged insider trading through a Gensol-linked entity, Wellray, which took loans from Gensol to make private investments — effectively using public-company capital as a “personal piggybank” 🐷.

⛔️ As a result of these findings, SEBI barred both Jaggi brothers from holding any directorship or key management positions in Gensol Engineering, and prohibited them from accessing the securities markets pending further inquiry.

This misuse of fleet-financing loans not only breached fiduciary duties but also shattered investor confidence.

Mistake 2: Corporate governance has left the chat

BluSmart’s corporate governance frameworks were severely compromised by an over-reliance on its related party, Gensol Engineering — a publicly listed EPC and EV-leasing arm founded by the same promoters — which served as BluSmart’s largest fleet supplier until 2024 and counted BluSmart as its top customer.

  • 🪢 Deep Ties to Gensol Engineering

    • BluSmart leaned heavily on its sister company Gensol for nearly a third of its 8,500-strong fleet, routing EV leases through Gensol EV Lease Pvt. Ltd. and related entities — even as Gensol’s own balance sheet was cracking under heavy debt.

  • ⚠️ Related-Party Transactions Masked Risk

    • Gensol’s FY24 filings show over ₹148 crore in board-approved contracts with BluSmart’s subsidiaries — transactions that, while audited, lacked true arms-length safeguards and concentrated procurement and financing power in the hands of BluSmart’s founders.

  • 📉 Regulatory Fallout Exposed Governance Lapses

    • As Gensol’s stock plunged >60% and credit agencies downgraded it to default, the Ministry of Corporate Affairs launched a probe under Section 210 of the Companies Act into both firms’ governance practices — spotlighting how entwined leadership and opaque funding channels can topple even a fast-growing EV unicorn.

This web of related-party transactions, board-approved but inadequately scrutinised, exemplifies a critical lapse in corporate governance.

🧠 3 Lessons Learned

Lesson 1: Your integrity is everything

SEBI’s investigation revealed ₹262 crores ($31M) of EV loans were funnelled into luxury apartments, golf sets, and international trips.

This wasn’t a minor accounting error — it was systemic fraud that torched trust with investors, drivers, and customers overnight.

🌮 Key Takeaways:

  • 🖖🏻 Separate ownership

    • If your startup relies on a sister company (i.e. a factory, logistics arm), assign independent leadership to each.

    • Example: Tata Group uses separate CEOs for Tata Motors and Tata Power to avoid conflicts.

  • 👮🏻 3rd-party audits

    • Hire external auditors to review related-party transactions quarterly.

  • 🫡 Disclose everything

    • Publish related-party deals in shareholder reports. Even if it’s embarrassing, transparency builds trust.

  • 🤝🏻 Include founder accountability clauses in your term sheet

    • If you breach fiduciary duties, automatic forfeiture of equity.

Lesson 2: Build a rock-solid governance framework

BluSmart’s founders treated their sister company, Gensol Engineering, like a personal ATM. Loans meant for EVs funded golf sets and Dubai trips.

SEBI called it a “complete breakdown of corporate governance“.

🌮 Key Takeaways:

  • 👑 Founder ≠ King

    • Assign a non-family CFO or board member to veto shady transactions. Gojek (Indonesia) survived scandals by bringing in external governance early.

    • (If Needed) Adopt a conflict-of-interest policy that forces founders to recuse themselves when their own companies come up.

  • 🙌🏻 Separate Church and State

    • If you have related-party deals (i.e. your cousin’s factory supplies your startup), hire independent auditors to review contracts.

    • Example: Ola Electric works with multiple battery suppliers, avoiding over-reliance on one entity.

  • 🤓 Transparency ≠ Weakness

    • Publish annual governance reports, even if you’re private.

    • Indian fintech giant PhonePe does this to build investor trust.

Lesson 3: Debt is a double-edged sword

BluSmart’s fleet relied on ₹977 crores in loans routed through Gensol. When debt piled up, credit agencies downgraded Gensol to “junk,” triggering a fleet fire sale.

🌮 Key Takeaways:

  • 🙏🏻 Debt diversification

    • Don’t rely on one lender (Gensol used IREDA).

    • Split loans across banks, NBFCs, and bonds.

    • Example: Indonesia’s Blibli diversified lenders to avoid a BluSmart-style collapse during COVID-19.

  • 🤑 Cash Flow ≠ Profit

    • Track burn rate like a hawk.

    • BluSmart expanded to Mumbai while ignoring Gensol’s debt bomb.

  • ⚡️ Hybrid model

    • Asset-heavy models (EVs, real estate) are debt magnets.

    • BluSmart could’ve leased cars from third parties (like Zoomcar) instead of owning them.

    • Example: Grab uses a hybrid model — owning some EVs while partnering with drivers who own their cars.

    • Lower debt, lower risk.

🔗 The Runway Insights

  • How Perplexity grows and outcompetes Google (Link)

  • Building Under Constraint: The $10M/Employee Playbook (Link)

  • How Klaviyo built a $1B ARR marketing platform that e-commerce customers love (Link)

  • State of Private Markets: Q1 2025 (Link)

  • How founders should think about runway (Link)

  • 6 steps to make your warm intros more persuasive (Link)

💰 Southeast Asia Funding Radar

  • BrioHR raises $6.5M (Series A) to revolutionise human resources for companies across SEA (Link)

  • VFlowTech raises $20.5M to advance their smart energy solutions (Link)

  • Arysun secures $575 (Pre-Seed) to make solar energy accessible to middle-income households (Link)

  • Citics lands $2.1M to digitise mortgage lending and real estate transactions (Link)

  • Egune secures $3.5M to build Mongolia’s culturally rooted AI future (Link)

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  2. Promote your business to 18,000+ founders: Acquire high-value leads and customers for your business by getting your brand in front of highly engaged startup founders and operators in Asia.

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Thanks for reading. I hope you enjoyed today's issue. More than that, I hope you’ve learned some actionable tips to build and grow your business.

You can always write to me by simply replying to this newsletter and we can chat.

See you again next week.

- Admond

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