Info Edge wrote off all ₹276 crore it put into Rahul Yadav's 4B Networks within months

Info Edge, the Noida-based internet group, wrote off its entire investment in 4B Networks, a proptech start-up led by Rahul Yadav, who co-founded Housing.com. Entrackr reported that the company took a ₹276 crore write-down as an exceptional item in its Q3 FY23 results, because it expected raising fresh money for 4B to be hard and the start-up's cash burn to be unsustainable.

Info Edge held 57.17% of 4B through its subsidiary Allcheckdeals. 4B had been valued at around $185 million (₹1,462 crore, post-allotment) when it raised ₹90 crore from Allcheckdeals in September 2022. The two-year-old company runs a platform for real-estate developers and brokers to deal with each other, and says it has more than 100,000 brokers and over ₹4,000 crore of home loans disbursed.

Info Edge chief executive Hitesh Oberai told an analyst call that the company was writing down the investment 'in light of the current state of the environment and the significant uncertainty towards funding options available to 4B in future'. Provisions of ₹411.7 crore for the investment pulled Info Edge's Q3 profit down to ₹46.4 crore from ₹93.9 crore in Q2, while revenue slipped 2.5% to ₹589 crore.

₹276 crore written off in full; ₹411.7 crore of related provisions cut Info Edge's quarterly profit 50.6% to ₹46.4 crore.

Info Edge invested ₹90 crore in September 2022 at a valuation of about $185 million, then within five months judged the start-up's burn unsustainable.

The funding environment tightened, and Info Edge expected raising fresh money for 4B to be difficult.

4B depended on outside capital to keep operating, so Info Edge's outlook on funding drove the size of the write-off.

Entrackr noted that this was the third start-up of Yadav's that failed to fly after initial success.

A late-stage cheque at a rich valuation assumes follow-on funding. When the funding window shuts, the burn rate leaves the investor owning the whole loss.

Yadav, who still held over 31% of 4B, had earlier left Housing.com in 2015 after a dispute with investors including SoftBank, and Housing.com later merged with PropTiger. His next venture, Intelligent Interfaces, shut soon after raising funds. Entrackr's report does not say whether 4B continued operating after the write-off.