Guidelines for startups post Stayzilla fiasco

Chennai: Homestay startup Stayzilla founder Yogendra Vasupal's highly publicised arrest last week raised heated debates on social media. Prominent entrepreneurs and organisations like iSPIRT and TiE were vocal about the systemic issues that founders have to deal with. As people close to the matter are in the effort of getting Vasupal out on bail, stakeholders in the ecosystem are working on helping startups deal with matters like vendor payments.

The Indian Private Equity and Venture Capital Association (IVCA) is planning to set up a committee that will develop guidelines. “There is inherent risk in every business. A vendor should know that credit is a risk they take while doing business. We only want stakeholders in the ecosystem to be aware of what they are getting into,” said Gopal Srinivasan, chairman, IVCA.

The government is said to be working on a fresh set of initiatives for startups, including rolling out norms for resolution of companies that are facing financial stress within 90 days and new tax proposals. This comes at a time when several companies are finding it tough to raise funds. “We want to ensure that startups have access to debt and equity to grow. Various measures are being discussed,“ DIPP secretary Ramesh Abhishek told TOI earlier.

The Indus Entrepreneurs (TiE) is in the process of arranging for seminars for their members to expose them to possible scenarios that can crop up, how they can handle these and reach out early enough to those who can help.

Software product think-tank ISPiRT is setting up a working group which will tackle systemic issued with bankruptcy/shut down such as mediating between vendors and startups and putting out best practices. Work towards this is expected to begin once timely matters such as getting the founder out on bail is taken care of.