Challenges faced by startups and their consequent effect on the economy have been the matters of discussions at various fora and are being hotly debated everywhere. Failed Entrepreneurs have been regarded as victims and the regulatory authorities have been labelled as the villains.

The recent arrest of Stayzilla’s cofounder Mr. Yogendra Vasupal by Chennai Police has led to spurt of reactions from start-up community and also by NASSCOM. Some are blaming Government’s failure to protect start-up ecosystem while some are of the view that though ecosystem for start-up exists but there is need for special law for start-ups. Many have even gone to the extent by suggesting that the Government should set up funds to pay suppliers and vendors of the defaulting start-ups. Strangely when few days ago there was mass retrenchment of the employees by number of established start-ups, there was not even the iota of criticism either by business chambers or any industry. There was no coverage of mass retrenchment of the employees by businesses (may be it was not important news), there was no discussion as to how the employment of hundreds could have been terminated in a single day. No demand for investigation (probably because no EVMs were involved). Those hundreds of termination letters were insignificant as it added to already existing 30% younger population belonging to NEET (not in employment nor in education and training).

The entire stress seems to be that the entrepreneurs who have failed in the business are the victims. Instead, whether the failure of start-ups is due to rough market conditions or deliberate should be investigated thoroughly by the Government agencies. Increased valuations and sudden downfall of the venture are the matters of concern. These start-ups potentially disrupt established businesses in the immediate short run with their unexplained incentives and credits. Trends have shown that there does not appear to be long term planning by start-ups as the entire focus is on increasing the valuation so that the key managerial personnel who are holding ESOPs get heavy booty after one year of their appointment(statutorily minimum period of one year is required for vesting of ESOPs) and private investors get more than 100% rate of return on their investments in less than one year. There should be transparency in disclosing the incentives. Yes special law is needed but for carrying out the audit and investigation in to the affairs of the start-ups. Government should not be really concerned about the failure of the private business ventures but it should definitely be concerned about the fate of other stakeholders like employees /consumers due to failed start-ups. Start-up is like any other business venture and is already receiving more than required attention from the Government. I think the Government rather than setting up funds to pay suppliers and retailers should pay to the retrenched employees who are hired and fired.

Arrest of Mr. Yogender Vasupal for the alleged civil dispute is not uncommon and does not concern start-up only and has been resorted to in other businesses as well. It has something to do with our criminal justice system which is being abused and is already a topic of various parliamentary discussions and court judgements.

The need is to develop and evolve our business ethics and practices rather than putting the blame on government and others