BluSmart, India's all-electric cab-hailing startup, has suspended its service in multiple cities, including Delhi-NCR, Bengaluru, and Mumbai, amidst a probe by the Securities and Exchange Board of India (SEBI) into Gensol Engineering, a publicly listed company co-founded by BluSmart's co-founders. The sudden unavailability of the service has left many riders stranded, with some expressing concerns about accessing the money stored in their BluSmart wallets.

The SEBI investigation into Gensol Engineering alleges that the company's co-founders, Anmol Singh Jaggi and Puneet Singh Jaggi, redirected substantial loan amounts for personal use, including buying luxury real estate on the outskirts of India's capital. Following the market regulator's orders, the Jaggi brothers stepped down from their managerial positions on Wednesday. In a filing to the Indian stock exchanges, Gensol Engineering stated that the brothers "are no longer participating in the management of the Company as per SEBI's instructions, effective immediately."

Despite the service being unavailable to riders, the BluSmart board did not share any updates with its investors until Wednesday, according to TechCrunch. An investor in the startup expressed surprise at the sudden unavailability, suggesting that it may be a "rub-off effect" of the SEBI probe into Gensol Engineering. The investor revealed that BluSmart had disclosed impressive growth metrics in early April, including an annual recurring revenue (ARR) of 8.4 billion Indian rupees ($98 million) in 2024 and a monthly revenue of 700 million Indian rupees. The startup's fleet size had also grown to around 8,700 electric vehicles (EVs), up from 6,000 EVs in early 2024.

BluSmart has received funding from global investors, including BP Ventures and Mayfield India Fund, and was valued at $250 million in its last funding round. The startup had raised $25 million from Switzerland-based impact fund ResponsAbility to expand its EV charging infrastructure. Media reports had suggested that BluSmart was pivoting into a fleet partner for Uber, but Gensol Engineering clarified in its recent stock exchange filing that it "has not entered into any agreement nor is it in discussions for any merger, acquisition, asset sale or any other significant transaction that has not been disclosed."

When contacted, BluSmart co-founder Punit K. Goyal shared screenshots of LinkedIn posts by individuals claiming he was "caught in the storm" due to the alleged corporate governance issues with Gensol Engineering. However, co-founder Anmol Singh Jaggi did not respond to requests for comment. The sudden suspension of BluSmart's service has raised concerns about the startup's future and its impact on the Indian electric vehicle ecosystem.

The development also highlights the importance of corporate governance and regulatory compliance in the startup ecosystem. As the Indian government pushes for greater adoption of electric vehicles, the suspension of BluSmart's service could have broader implications for the industry. The SEBI probe into Gensol Engineering and its co-founders serves as a reminder that startups must prioritize transparency and accountability to maintain investor trust and public confidence.

As the situation unfolds, BluSmart's investors, customers, and partners will be closely watching for updates on the startup's future plans and its ability to recover from this setback. The Indian startup ecosystem will also be keenly observing the outcome of the SEBI probe and its implications for corporate governance standards in the industry.