In August 2023, Phablecare, a Bengaluru-based health-tech start-up abruptly dropped off the grid. The company’s website was taken down, and all the business profiles were deactivated, leading to speculation about why a company that had received $25 million in funding in 2022 went dark. Phablecare provided health assistance by monitoring the health of patients who used their services and suggesting disease-specific guidance with the help of their network of doctors, hospitals and insurers.

The start-up, which was founded in 2018, had raised $25 million in March 2022, counting Kalaari Capital, Omron Ventures and Aflac Ventures among its investors. Yet, former employees who spoke to TNM said that the workforce shrank from almost 2,000 to just 200 in the following months. Although the company welcomed a few recruits in January 2023 and shifted to a bigger office space in HSR Layout, it encouraged all its employees to resign within a month and a half before suspending operations due to lack of funds, employees said. Now, former employees are struggling to get compensated for three months of work—between December 2022 and February 2023.

A former employee Thilak* told TNM, “We were encouraged to pursue other opportunities in February, and the company closed all operations by February 15. They hadn’t paid me and several others for two and a half months of work. They promised to settle what was owed to us by May.” The company had also allegedly promised severance pay to employees and had also assured to insure them for health till April. “But none of their promises were kept,” Thilak added.

Satish* another former employee said the company had delayed salaries from October 2022 and that they were compensated for October and November only in December, after which they were never paid. “In January, it seemed like they were trying to show that they were afloat, and they shifted to a new and bigger office. They even recruited new employees but shut the company down within a month from then,” he said.

Garvit*, who was hired in January 2023, said that he was asked to relocate to Bengaluru from Singapore. “They asked me to join them at their new office space in January. But I wasn’t paid my salary for January through mid-February. They had also promised severance pay for 15 days (limited severance because Garvit was on probation). They have to pay me Rs 1.6 lakhs apart from the promised relocation bonus. I was also not reimbursed for a business trip I had taken during my tenure as their employee,” Garvit said. All the employees who spoke to TNM alleged that they are individually owed over a lakh as compensation for three months.

In April, 20 employees approached the Commissioner of Karnataka Labour Department and filed a complaint against the founders Sumit Sinha and Mukkesh Kumar Bansal. An official from the Labour Department said, “We had written two to three letters to the founders asking them to settle all dues over a few months. The company owes several crores of rupees to a couple hundred employees. The founders responded with excuses and even claimed that Phablecare was to be acquired by another party. But that never happened, and the employees are still unpaid.”

Unsatisfied with the response of the founders, several employees in May, expressed their frustration via email and addressed it to Mukkesh and Sumit. Mukkesh responded to some of the emails and admitted he was unable to pay them nor provide a timeline for paying them. He claimed that a few employees had misused their position in the company and had resorted to unethical means to make money for their own gain. An investigation is underway, he responded.

When TNM reached out to Mukkesh regarding his allegation of employees embezzling funds and sought details regarding their investigation, he refused to comment. Former employees who spoke to TNM dismissed Mukkesh’s allegation and blamed Sumit and Mukkesh. “The founders have spent all the money, and they were never transparent to us employees,” one of them alleged.

A few former employees, in August, visited the old and the new office spaces that Phablecare had occupied in HSR Layout and found no trace of the company nor its founders. The founders have been unresponsive since June this year, they alleged. The concerned Labour Department official told TNM, “We have endorsed the former employees’ case, and we are now encouraging them to go to court.”

*All the names of former employees were changed upon their request for anonymity.