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 Inc., 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.
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.