India: Stayzilla founder Vasupal arrested on charges of fraud, investors seek release

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(From left) Stayzilla founders Sachit Singhi, Yogendra Vasupal and Rupal Yogendra.

Prominent investors, founders and other stakeholders in India’s growing start-up ecosystem are rallying around Stayzilla founder Yogendra Vasupal and calling for his immediate release from police custody, a day after he was arrested by local authorities in Chennai on charges of defrauding an advertising agency.

According to a leaked email that was sent on Tuesday, Stayzilla co-founder Sachit Singhi said that one of Chennai-based Stayzilla’s vendors Jigsaw Advertising was harassing the founders in order to recover money that Stayzilla owes them, adding that Jigsaw had lodged a complaint at the Mylapore police station against both Vasupal and Singhi, accusing them of fraud. Mint has seen a copy of the email.

In February, the online homestay marketplace had said that it was shutting down because of an unviable business model. The start-up counted Matrix Partners and Nexus Venture Partners among its investors.

In an email to Mint on Wednesday, Jigsaw accused Stayzilla’s founders of committing fraud, including embezzlement of funds. Jigsaw also sent documentary evidence, including emails sent by Stayzilla’s Singhi, assuring Jigsaw that all dues would be cleared by the start-up.

“(We) have proof that these guys have siphoned money from the company accounts into their personal accounts (not Salary) and into accounts of their own family members who hold no position in the company,” Jigsaw’s Aditya C.S. said in an email to Mint.

In a pre-saved blog post on Medium that was published on Tuesday around the time of his arrest, Vasudev detailed the chain of events leading up to the past few days, claiming that he and Singhi were “under duress” from authorities.

Vasupal’s arrest sparked outrage across India’s start-up community, with prominent investors and entrepreneurs calling for his immediate release and terming the arrest unconstitutional.

Among others, Chennai-based Girish Mathrubootham, founder of enterprise software start-up Freshdesk, also contacted local authorities to push for Vasupal’s release.

On Wednesday, Karnataka IT minister Priyank Kharge said that he was working with his ministry counterparts in Chennai on the issue.

“Working to see how we can sort out @stayzilla issue with my counterpart in Chennai. Will be reaching out to him soon,” tweeted Karnataka IT minister Priyank Kharge on Wednesday morning.

“Disappointed + distressed @ heavy handed tactics against @YogiVasupal Stayzilla. Totally unacceptable. Alerting authorities requesting help!,” tweeted Ravi Gururaj, founder of Bengaluru-based Qikpod who also chairs Nasscom’s software product council.

The latest chain of events come weeks after Stayzilla announced on a blogpost on Medium that they were shutting down and looking “to reboot operations”.

“I would like to announce today that we would be bringing to a halt the operations of Stayzilla in its current form, and looking to reboot it with a different business model. This has been one of the toughest decisions that I have taken so far but it is the right thing to do,” Vasupal had said in a post published on 23 February.

Among the evidence that was shared by Jigsaw on Wednesday were emails from Singhi and excel sheets with financial details of the amount Stayzilla allegedly owes Jigsaw.

“We would like to revert by end of December on what, when and how we are going to clear the payable related to baggage tags. On billboard campaigns, I need to discuss internally and revert on this later,” Singhi said in an email to Jigsaw on 2 December.

Stayzilla’s co-founder and COO Rupal Yogendra said that the now-defunct start-up’s lawyers were trying to put together a bail request for Vasupal, but declined to comment on the rest of the matter.

Also Read:

India: Matrix-backed Stayzilla shuts down, says will ‘reboot’ with different model

India: Stayzilla raises $13m Series C from existing investors Matrix, Nexus

India: ShopClues founders in public spat, Sandeep Aggarwal accuses wife of ousting him

This article was first published on Livemint.com