Business

Stayzilla shuts down, may reboot with different model

24 Feb 2017 | By Jayasri Viswanathan
Stayzilla shuts down, blames difficult business environment

Chennai-based online homestay and alternative stay aggregator Stayzilla has announced the suspension of operations, even as India's e-commerce sector is fighting to survive.

CEO Yogendra Vasupal issued a statement saying it was halting operations and looking to reboot with a different business model.

Stayzilla will suspend and refund all the bookings made on its website and app for check-ins after 28th February.

In context: Stayzilla shuts down, blames difficult business environment

24 Feb 2017Stayzilla shuts down, may reboot with different model

What was Stayzilla's business?

Stayzilla, started in 2007, was the earliest room aggregator that had about 8000 homestay properties in 900 towns. It had tied up with various state tourism boards and was funded by Nexus Venture Partners, Matrix Partners India, Indian Angel Network, Spice Capital and InnoVen Capital.
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What caused the start-up to shut operations?

LossesWhat caused the start-up to shut operations?

Vasupal said the Indian travel marketplace does not have 'local network effects', placing an additional burden on company resources.

Struggle to match competitive prices while seeking huge volume of sales cost the company dearly.

Lack of basic infrastructures such as public goods services, logistics, tech-savvy suppliers and online user demands proved fatal. The company even had to teach usage of Internet for some hosts.

15 Mar 2017A month after shutting down, start-up Stayzilla's CEO arrested

Yogendra Vasupal, the CEO of Stayzilla has been arrested by Chennai police and locked up in Puzhal prison.

His arrest came after Jigsaw Advertising slapped charges of fraud against him and the company. Jigsaw registered a formal complaint against Vasupal and his company in Mylapore police station.

Police also visited Stayzilla's Bengaluru office, but were turned away as they had no warrant.

11 Apr 2017Stayzilla founder Yogi finally gets bail

Stayzilla founder Yogendra Vasupal, arrested last month for alleged fraud, has been granted bail by the Madras HC. He will have to deposit Rs. 40L within a week "to establish bonafide intentions".

Judge S Baskaran observed it was "purely a dispute between two (Stayzilla and Jigsaw) businessmen".

Though Jigsaw filed a complaint against Vasupal alleging fraud, its counselor pushed for mediation; however, Stayzilla refused.