Is BluSmart a Wake-Up Call for All Startups? Insights from Investors, Advisors & Legal Experts

India's electric mobility space is caught in a serious crisis as BluSmart Mobility, one of the leading electric ride-hailing platforms, shuts down amidst serious financial misconduct allegations against its co-founders and related company, Gensol Engineering Ltd.

The BluSmart-Gensol case has brought up major concerns regarding startup governance, due diligence, and investor responsibility.  Legal, investment, and advising experts emphasize the importance of robust checks and balances for long-term success and trust.

BluSmart Scam: Misuse of Funds

The Securities and Exchange Board of India ( SEBI ) has charged Anmol Singh Jaggi and Puneet Singh Jaggi, co-founders of BluSmart and Gensol, with misappropriating huge amounts of money. Investigations show that loans worth around ₹9.78 billion, meant for buying electric vehicles, were allegedly used for personal indulgences, such as a ₹40 crore flat and expensive golf gear.
In response, BluSmart has engaged Grant Thornton to carry out a forensic audit to track the flow of funds and evaluate internal financial controls.

ALSO READ: Why Are BluSmart Cabs Suddenly Off the Roads? Who To Blame Now

BluSmart Scam: Impact on Stakeholders

The scandal has resulted in BluSmart suspending its services, rendering thousands of drivers jobless and customers uncertain about refunds. Gensol's share price has dropped by almost 90% this year, and credit rating agencies have lowered its ratings due to liquidity and governance concerns.

Paramdeep Singh, a seed-stage investor, said, "Great customer experience without financial clarity or governance rigour is theatre, not scale." He underscored that the crisis erodes trust in the startup ecosystem and may discourage future investments.

BluSmart Scandal: Demand for Due Diligence

Industry practitioners emphasise the need for stringent due diligence. Priyanka Madnani, Terex Venture Founder, said, "Due diligence isn't a checkbox exercise prior to wiring money—it's the underpinning of startup trust, reputation, and viability over time." 

She prefers thorough checks, such as founder background checks and enforceability of contracts.
 

Prakhar, Partner at Tatvika Legal, noted, "SEBI’s interim findings paint a serious picture of fund misappropriation. This episode underscores the urgent need for stronger governance, especially in high-growth startups where compliance often trails ambition."

Broader Implications for the EV Sector

The BluSmart-Gensol case is a warning to India's new electric vehicle market. It underlines the importance of transparent governance systems and the dangers of unconstrained finance when financial control is absent. 

In the quest for high-speed development in the sector, building strong compliance frameworks becomes the key to upholding investor confidence and fostering long-term growth.