Chaos Alert: Popular Indian Startup Founder in Legal Tussle Post Shutdown

Stayzilla has gotten entangled in a criminal case that has led to founder Yogi Vasupal's arrest.

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In a sour spillover, the founder of India’s popular startup Stayzilla has gotten tangled into a criminal case that has led to him getting arrested.


The company that was set up with the objective of bringing Tier II and Tier III hotel owners online ran out of funds and shut down last month. In what is being called out as pending vendor payment, the founder Yogendra Vasupal is facing a criminal case and has been arrested.

Media reports suggest the company whose complaint has led to Vasupal’s arrest is alleging defaults. Jigsaw Solutions has alleged that Stayzilla has been defaulting on payments since April 2016 and also accused the company of embezzlement of funds.

In a moving call for help, Vasupal, has posted a blog in which he has detailed his side of the story, and how he has been wronged by the police. He details two cases, the first one against a politician who was Stayzilla office’s landlord and the second against a media agency with whom the company had a dispute over deficiency of services. The stark difference in the approach taken by the police in these 2 cases should tell you something important.

Overwhelming Support

The startup community has come out in active support. R Narayanan, President of The Indus Network Chennai said the arrest of Vasupal has lead to a drop in morale of the start-ups in the State such incidents will result in migration of start-ups from Tamil Nadu.

Famous startup names including Sachin Bansal of Flipkart, Snapdeal Founder Kunal Bahl, Freshdesk's Girish Mathrubootham, and Mobikwik's Bipin Preet Singh came out in full support on social media, some demanding his release.

Karnataka IT Minister Priyank Kharge has shown the government’s support via tweets in which he has promised help if Vasupal is on right side of law citing he has held talks with Tamil Nadu IT Minister and IT Secretary.

Noted Serial Entrepreneur  and startup mentor Ravi Gururaj also took to Twitter to express his disappointment with Vasupal’s arrest.

Spillover Not New

Popular startup Oyo Rooms also received a similar default payment allegation by one of its vendors last year.

Celebrity couple Shilpa Shetty and Raj Kundra –backed Best home shopping channel Deal TV post suspension of operations in November last year faced allegations unpaid dues for a tenure of two months by company employees.