Indian entrepreneur languishes in jail

.

.

Published Mar 25, 2017

Share

Bangalore - Entrepreneurs around the world pay a price

when their ventures fail, from lost fortunes to tarnished reputations. But in

India, one startup founder has been hit with a particularly harsh penalty for

his company’s demise: He’s in jail for not paying money to one of his

suppliers.

Yogendra Vasupal, or Yogi as he is known in startup

circles, had founded Stayzilla, a marketplace that lets homeowners and renters

find each other online. The startup struggled against tough local competition

and Airbnb, closing its doors in February. Yogi was arrested by police last

week for allegedly owing an advertising firm 17.2 million rupees (about $260 000).

The episode is sparking a forceful backlash in India’s

technology community. More than 175 founders from the country’s startups have

signed an open letter to top ministers and bureaucrats calling for Vasupal’s

release and a fair trial. The letter, endorsed by Vijay Shekhar Sharma of

digital-payments provider Paytm and Bhavish Aggarwal of ride-hailing service

Ola, argues the future of entrepreneurship is at risk.

“If ever there’s a right to be an entrepreneur, that’s

clearly been violated. Period,” reads the letter, which is addressed to India’s

home and commerce ministers among others. “The question is not how this will

affect entrepreneurship today, but how young Indians looking to become

entrepreneurs in the future will give up even before starting up.”

The episode is unifying India’s young startup community

like never before. They see common cause with Stayzilla’s founder in a way they

resisted even when facing predatory pricing from global giants or new taxes

from the government. The effort has spawned a website,  help-yogi.com, and #helpyogi

on Twitter.

#HelpYogi Thankfully, failing as an entrepreneur is not a non-bailable offence. Failing to safeguard the rights of Yogi is. #ReleaseYogiNow https://t.co/65owJbR3M5

— Paras Malhotra (@Paranomadic) March 21, 2017

Vasupal was picked up on March 14 when walking on a

Chennai street by two policemen in plain clothes who snatched his mobile phone.

The vendor had filed a police complaint accusing the founders of defrauding his

company of more than 17 million rupees.

The letter alleges the advertising company is far from

innocent in the conflict. It charges the vendor threatened Stayzilla and sent

voodoo dolls to Vasupal’s parents and to his co-founder. The letter also

contends the company owed money is “well-connected” and benefits from

influential politicians and officials.

Vasupal has not been able to get a bail hearing a week

after his arrest despite attempts made by the community and legal experts. A

fresh attempt to secure bail is planned for Wednesday.

Indian startups are already struggling with a downturn in

venture investing and a rise in competition that have led to layoffs, shutdowns

and impending closures. Kunal Bahl, co-founder of e-commerce provider Snapdeal,

said on Twitter that there is a growing trend of entrepreneurs coming under

attack.

“Many startup founders, including myself, have seen the

ugliness of getting on the wrong side of people  with bad intentions,” he

wrote.

Vasupal and his co-founder had said in February they were

shutting Stayzilla because the business model wasn’t viable. They had raised

millions of dollars from investors including Matrix Partners and Nexus Venture

Partners.

Precedent

Shashank N.D., founder and chief executive of healthcare

startup Practo Technologies, said the episode may well set a precedent for how

startup founders fare when they deal with unpaid suppliers. “If this can happen

to a well-known, well-backed startup, what can happen to smaller ones?,” said

Shashank, who also signed the letter. “Startups need the safety net of basic

law and order. We are not asking for anything special.”

The signatories to the letter say they want more than

freedom for Yogi. They called for an independent investigation into the arrest

and whether local authorities abused their power. 

“What Yogi and his family are going through now make

India look like the worst place, a nightmarish choice to become an

entrepreneur,” the letter says. “This has had global repercussions and

besmirched India’s reputation in Silicon Valley and elsewhere.”

BLOOMBERG

 

Related Topics: