1. “Investors could have veered Stayzilla towards mediation”

“Investors could have veered Stayzilla towards mediation”

"There were options available which could have been used in landing the dispute in the right direction.. The provisions of Bankruptcy Code could have been taken advantage of," Gopal Srinivasan told.

By: | Bengaluru | Published: April 30, 2017 1:55 PM
Investors could have veered Stayzilla towards mediation. (YouTube)

IPEVCA Chairman Gopal Srinivasan today said the institutional and angel investors could have veered Stayzilla towards mediation, rather than take an intransigent position of insisting on a settlement or apology, in landing the dispute in right direction. “There were options available which could have been used in landing the dispute in the right direction.. The provisions of Bankruptcy Code could have been taken advantage of,” Srinivasan told PTI in an email interview. The institutional and angel investors could have veered the company (Stayzilla) towards mediation, rather than take an intransigent position of insisting on a settlement or apology before even exploring the process,” he said.

He made the remark when asked whether the institutional investors played their role appropriately or not. The arrest of Stayzilla founder Yogendra Vasupal for non-payment of dues to Jigsaw Advertising and Solutions, a vendor, had stirred a hornet’s nest in the entire startup ecosystem, after both the parties traded allegations against each other.

Srinivasan, who is also TVS Capital Fund Head, further said the case has been distorted by rampant over-reporting after founders and ecosystem members took to press and twitter indiscriminately, besides the creditor acted very aggressively.

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“The creditor as well, in their anxiety, acted very aggressively?… It seems as though those who made the most noise, got all the attention, regardless of the facts or content… Perhaps this is common is any such situation, which gets media over coverage,” Indian Private Equity and Venture Capital Association Chairman said. Srinivasan also said over trading can happen in any venture-funded firm, as in any growth-driven business, but many questions like who should throw the red flag or stop the train, haunts stakeholders to be answered.

Further questioning the investors, Srinivasan said the only aspect which needs to be looked at is how the institutional investors played their role.
Replying to a query, Srinivasan said, “Stayzilla is a commercial dispute.. The best person to decide what is right or wrong is the arbitrator.”
Arguing further, Srinivasan said the dispute should be looked at as a fight between vendor (Jigsaw) and company (Stayzilla), instead of startup community versus the vendor.

To another query, Srinivasan said disputes like Stayzilla are bound to happen because startup eco-system is funded by venture capital, which is nothing but risk capital, not safety capital.

“Risk capital should not be mistaken for safety capital. Venture capital is the form of working capital, which funds startup use for burning their Profit and Loss expenses. In such an ecosystem, these kinds of disputes are bound to happen. These aspects we are going to cover in our guidelines which our association will be issuing shortly,” he added.

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