Cuffing start-up fervour

Following the late night arrest of Stayzilla founder Yogendra Vasupal on Tuesday on charges of fraud, the Indus Entrepreneurs (TiE) and The National Association of Software and Services Companies (NASSCOM) said that arrest of the founder of Vasupal will hit the start-up ecosystem in the state and even labelled the harassment brought upon the founders as ‘terrorism.’ 

Addressing a press conference, Naru R Narayanan, President, TiE Chennai said that they are not taking sides with either of the parties, but are questioning the way in which the matter has been handled. “Stayzilla founders were considered as one of the icons of the start-up environment is the city.  Crushed photographs of one of the founder’s son was gruesomely mutilated and sent to the parents’ house,” says Narayanan. “The case is clearly a civil case, where the payments have not been made to the vendor.” The TiE representative went on to say that there were many cases where top industrialists have defaulted on payments and no police action was taken against them, it will only affect the ecosystem. “We have felt the  pulse  among the start-ups in Chennai and there has been a drop in the morale. Incidents like this will start the trend of migration of start-ups away from TN,” he said. 

TiE also stated that if it turns out that someone can recover money through harassment, there is likely to be more incidents of civil cases being twisted into criminal cases, which will not be good for the ecosystem. It also said that unverified complaints and vague unsubstantiated data have been “conveniently” taken into account and action taken in a manner that is clearly intended to be intimidation and extractive. For the press to be given a statement that the founder has “confessed” to the crime of having obtained credit on his advertising, is an insult to the intelligence of the citizen of the country, it added. On Tuesday night, a CCB team lead by Assistant Commissioner Muthuvel Pandi arrested Yogendra Vasupal at OMR when he was returning  home to Neelankarai after visiting a friend. Police picked him up from his car and took him into custody. He was produced before a magistrate later in the night before being lodged in Puzhal prison.  Police sources said Yogendra Vasupal had approached the advertisement agency to promote his company and the agency had released the company advertisements from February to May in 2015. Yogendra Vasupal owed Rs.1.72 crore but defaulted on the payment. “We were forced to arrest him as they were planning to wind up the company and escape. They had closed down their operations and a case of cheating was made out,” a CCB official told DT Next. 

On Wednesday morning, a post titled ‘Help! I need everybody’ posted by Yogendra surfaced where he said ‘I want to bring to light the problems that me and Sachit are facing.’ He mentioned about the harassment he faced from his landlord in Bengaluru with video and audio evidence. He also mentioned Aditya CS of Jigsaw Advetising agency, with whom the company had a dispute over deficiency of services. He accused the head of the agency of sending voodoo dolls to one of the founder’s homes, besides other threats. 

Meanwhile Aditya CS, founder of Jigsaw Advertising claimed that he has proof of Insara Technologies, the holding company of Stayzilla, acknowledging a balance of Rs 1,56,32,992. 

Aditya CS, says, “Despite repeated attempts since December, I have not been able to contact any of the founders. I was threatened when I spoke to them last. I filed the complaint first when I read in the papers on February 23 that the Stayzilla will be rebooting its operations. All three of them were off the radar.” When questioned about filing a criminal case, Aditya says, “I filed the case upon the suggestion of my lawyer and the court has honoured that. Despite repeated attempts I was not able to communicate with anyone from Stayzilla.”

Purushothaman K, Nasscom Senior Director, Tamil Nadu, Karnataka and Kerala, terming this to be a one-off incident, says that start-ups cannot be harassed. “They need to be celebrated. We have brands through start-ups that we need to be boasting about.” Asked about the role of mentorship and whether this incident would effect the overall eco-system of the start-ups, he said, “learning happens in different ways as there are different business models at work. Be it technology or the service space, there could be issues relating to finance, policy or technology. So, mentorship has to be viewed in that context. Every stakeholder understands the responsibility.” 

Yogendra’s arrest is not just of concern to the start-up community, but to the general public as a whole. Every citizen has a basic right to defend himself in a court of law. All we are asking is that everyone gets a level-playing field, when it comes to such matters. In a democracy, no one should be given undue advantage on the power of money or otherwise. You can’t look at it as an isolated incident that happened to someone in the start-up scene, it could happen to any common man. I do not think start-ups per se will be demoralised by such singular incidents. Especially, as right now, is as good as any time to be involved in a start-up. I don’t think youngsters wanting to venture into entrepreneurship should be deterred or scared as their success purely depends on the worthiness of their ideas and their willingness to pursue that idea. 

“I think there could be shortcomings on both sides. While it isn’t fair to get someone arrested overnight on a payment default, I also believe it is important to pay your vendors. In the midst of raising funds for the company, the right thing would have been to prioritise your debts and ensure that you clear them. I remember the case of the shut down of this start-up called TinyOwl, where employees even held the owners in a hostage like situation, when he went to close the offices. Even in traditional businesses, when the owners face cash flow issues and are compelled to shut shop, in good faith, they attempt to pay back whatever remaining cash they can. At a time when there is a general lull in the market, vendors are being more cautious about  lending their services on credit. But that is not a conducive  atmosphere as a healthy start-up ecosystem thrives on the foundation of trust.