Dailyhunt’s Umang Bedi rebuts round-tripping claims, says parent company VerSe Innovation followed all accounting norms

Following a Bloomberg report raising questions about financial transactions, VerSe Innovation has issued a strong denial. The Bengaluru-based parent company, which is behind popular platforms like Josh and Dailyhunt, has flatly denied accusations of round-tripping and inflated revenues in its dealings with the London-based bankrupt artificial intelligence startup, Builder.ai. In a sharp rebuttal, VerSe Co-founder Umang Bedi called the allegations "factually incorrect, absolutely baseless and defamatory", asserting that every rupee spent or earned was backed by documented services, third-party audits, and board oversight.

The charges surfaced when the news organisation, Bloomberg published a report that linked VerSe to questionable financial dealings. The report alleged ‘inflated’ sales and mutual invoicing practices between the two firms.

VerSe Innovation, which operates popular platforms like news aggregator Dailyhunt (with 350 million monthly users) and short video app Josh, has clarified that all its revenue and expense recognition is backed by real services rendered or received, supported by proof of delivery and third-party audits.

“The allegations are factually incorrect, absolutely baseless and defamatory,” Bedi told Fortune India. “We invoice and account for revenue in our financial statements against services that are actually rendered by us. Similarly, expenses are accounted for only for services received by us, with proof of delivery. We've been audited by a Big Four firm for the last decade, and even in the latest financials where Builder.ai was present, the auditors gave a true and fair view.”

The controversy revolves around alleged transactions between Builder.ai and VerSe Innovation from 2021 to 2024. According to Bloomberg, Builder.ai, now bankrupt after a creditor seizure, allegedly received around $60 million from VerSe for services such as app development, and in return, allegedly funnelled funds to VerSe subsidiary Quark Media Tech for marketing and other services.

Bedi refuted these claims, asserting the commercial agreement between the two companies lasted five years. “Our entire Josh (platform) runs on that cloud, our software, AI/ML… and there's tons of evidence. It's visible to our board and auditors,” he said, adding that VerSe spent over $80 million, not $60 million, primarily on AWS cloud, app development, and custom software, clarifying that every transaction or business done with the startup is accounted for.

The company, in its official statement, said all the services have also been verified from time to time by reputable external organisations. “VerSe invoiced and accounted for as revenue in its financial statements are against services that VerSe (or a relevant subsidiary) rendered and delivered to Builder.ai. Similarly, VerSe has accounted as an expense in VerSe's financial statements only for services that it in fact received from Builder.ai or its relevant subsidiary.”

Bedi addressed VerSe's commercial agreement with Builder.ai, stating that the latter was a large global advertiser and all advertisements had UTM (campaign tracking tags) and campaign delivery reports, along with full trackability.

On why VerSe ended the relationship with Builder.ai, Bedi said it was a financial decision. “All companies are cutting down on costs like us. That's visible in our financial statements — our net burn came down from ₹3,500 crore to ₹1,900 crore to ₹800 crore. And FY25 is even lower. In three months, we're breaking even… So, as we were cutting down on our spends, we stopped working on Amazon Cloud. We're working on other clouds where we're getting even deeper discounts,” he said.

VerSe also rubbished claims that the two companies coordinated to inflate sales figures, or that they billed one another for the same amount without delivering actual services. The company said any suggestions that “payments were intentionally interspersed in timing and amount of the invoices to avoid suspicion” are “not only baseless and factually incorrect but also defamatory and irresponsible”.

VerSe has also clarified points raised by its statutory auditor, Deloitte, regarding internal controls. It said the auditor had not found any issues with the company's financial statements but had flagged weaknesses in internal control areas such as IT, advertisement revenue, and supplier relationships. “The statutory auditors' opinion on the company's financial statements for FY 2023-24 provide a ‘true and fair’ view, meaning that no material misstatements have been identified by the statutory auditors in the said financial statements during the course of the audit.”

On the internal control lapses, it attributed to Deloitte, saying these weaknesses “do not affect our opinion on the said consolidated financial statements of the company”.

VerSe had raised $805 million in 2022 from the Canada Pension Plan Investment Board and others, making it the biggest fundraise of that year. Overall, it has raised over $1.5 billion in its lifetime. The company's revenue jumped 57% to ₹1,809 crore in FY23, from ₹1,151 crore in FY22, and stood at ₹1,261 crore in FY24. Bedi says the company aims to break even within the next three months.