Yogendra Vasupal, co-founder and CEO of Stayzilla, which shut down a couple of months ago, got out of jail yesterday. He had been granted bail a couple of days earlier on a surety bond of US$62,000 deposited with the Madras High Court in Chennai.
Stayzilla was India’s largest Airbnb-style site until it was forced to shut down as it wasn’t able to raise another funding round in time. In the financial year ending March 2016, Stayzilla had losses of US$14 million against a revenue of US$2 million.
After the shutdown, an advertising firm in Chennai took Stayzilla’s founders to court on alleged non-payment of dues to the tune of US$263,000 as well as intimidation when the payment was demanded. Yogendra, or Yogi as he is known, was then arrested. In granting bail, the judge said the case would be treated as a civil suit.
Tech community rallies around Yogi
The tech #startup community rallied behind the founder after his arrest, forrming a HelpYogi group. Nearly 200 founders signed a letter to ministers and bureaucrats asking for Yogi’s release and a fair trial. Yesterday evening, the HelpYogi group shared a photo of Yogendra with his family and friends after his release from jail. They said the judge had observed it was a “business transaction dispute between two companies,” and not a criminal case.
A HelpYogi website also popped up, endorsed by top mentors in the industry like Kris Gopalakrishnan, co-founder of Infosys and Axilor Ventures, Sharad Sharma, co-founder of nonprofit think-tank iSpirt, and Ravi Gururaj of tech industry body Nasscom.
“Startups have become the growth engine of innovation for India and the Prime Minister’s vision for Startup India has given a tremendous boost to the youth of the country and their dream to be an entrepreneur. However, as startups grow and scale, they will pivot, change priorities, or close down,” says a joint statement on the website. “It is important that the right legal framework is provided to address any business closures. Any actions that go beyond the provisions of the law to create undue fear and harassment to the founders and their families, as have been reported in this case, would raise the insecurity for startup founders, and make the cost of failure unacceptable to the vision of Startup India.”
In an email response to the entrepreneurs’ letter, the complainant, Aditya CS of Jisaw Solutions, says: “One constant refrain by this lobby is that the case will discourage aspiring entrepreneurs. It will discourage only the dishonest ones among them. In fact, this will set a good precedent for them not to cheat their vendors.”
Yogi’s troubles come amidst a downturn in fortunes in India’s startup industry, undoing the funding boom times in 2014 and 2015. Several consumer-facing internet companies have been forced to wind down following unsustainable business models and premature assumptions about the market. The biggest of them is Snapdeal, which is in the process of being sold to its ecommerce arch-rival, Flipkart.
Snapdeal co-founder and CEO Kunal Bahl also has a rendezvous with the courts. Kunal and 11 Snapdeal employees have been booked following a complaint by an event management company in Bangalore. It claims Snapdeal pulled out of sponsoring an event. Kunal has been summoned by a Delhi magistrate to appear in court before May 27.
Converted from Indian rupees. Rate: US$1 = INR 64.48.