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Business
17 Mar 2017

Indian start-ups go through nightmarish week

Indian start-up ecosystem gets a reality check

The often "over-glamorised" Indian start-up ecosystem went through a dismal week coloured by accusations of sexual harassment, incidents of bankruptcy, and ugly family feuds.

While the plot is still unfolding, all these incidents call into question the praise that has been showered on the Indian start-up ecosystem as an extraordinary arena for excellence.

We take a look into these developments.

In context

Indian start-up ecosystem gets a reality check

ShopClues

ShopClues' couple co-founders fall apart

Topping the list, of course, is ShopClues, one of India's nine unicorns.

Sandeep Aggarwal, co-founder and ex-CEO, in a barrage of Facebook posts, questioned his wife and co-founder Radhika Aggarwal's credentials, accused her of appropriating his voting rights, and charged her with having an "illicit love affair" with co-founder Sanjay Sethi.

Sandeep stepped down as CEO in 2013 after getting arrested by the FBI.

The Viral Fever (TVF)

TVF founder gets accused of multiple counts of sexual harassment

Founder of online entertainment digital start-up, The Viral Fever (TVF), Arunabh Kumar, was accused of sexual harassment by multiple women.

It all started on 12th March, when a blogpost by a user called "The Indian Fowler" accused Kumar of sexually harassing her on multiple occasions.

Subsequently, further accusations poured in.

TVF, in response, threatened "severe justice for making such false allegations".

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Stayzilla

Stayzilla founder arrested on charges of non-payment of dues

Stayzilla, an online home-stay aggregator, announced the shutdown of its operations last month due to its unsuccessful business model.

Meanwhile, Stayzilla founder Yogendra Vasupal was arrested a couple of days back for alleged non-payment of dues to Jigsaw Advertising, which filed a criminal case.

While many in the start-up community believe Vasupal's arrest is unfounded, such cases could tarnish the image of Indian start-ups.

Analysis pt.1

Lack of formal frameworks to address serious issues

With particular emphasis on the Stayzilla case, software industry body NASSCOM emphasized on the need to have a proper legal framework within which business disputes between start-ups could be settled without them turning into criminal cases.

On the other front, TVF's outburst and outright denial of allegations of sexual harassment points to a lack of formal procedures to address such serious accusations.

Issues which need more attention in India

Analysis pt.2

Issues which need more attention in India

While none of the aforementioned cases are unique to Indian start-ups, it points towards the relative immaturity of the Indian start-up ecosystem.

The cases raise questions about governance issues (ShopClues), bankruptcy proceedings (Stayzilla), and workplace culture and HR practices (TVF), none of which get any importance in the Indian setting as the focus of start-ups is always towards growth and fundraising.

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