A day after Sachit Singhi, Stayzilla's co-founder and CFO, sent an SOS e-mail to its investors that the other co-founder and CEO Yogendra Vasupal was "missing", comes the confirmation that he has been arrested by the Chennai police for allegedly defrauding one of its vendors, Jigsaw Advertising.
Started in 2005 as Inasra.com and rebranded as Stayzilla in 2010, the online platform for hosting and booking homestays was recently in the news for temporarily shutting down operations.
Vasupal's wife Rupal Yogendra (co-founder and VP-Operations at Stayzilla) was quoted as saying by Moneycontrol.com that he was taken to a magistrate on Tuesday night and was later lodged in the Puzhal prison by the Chennai police.
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The police acted against him on the basis of a complaint filed by Jigsaw Advertising that Stayzilla owes it about Rs 1.70 crore.
Karnataka minister for information technology Priyank Kharge said he has spoken to concerned officials in Tamil Nadu about the issue.
Spoke to TN IT Pr Secretary Mr. Ramchandran on @stayzilla issue. Have asked his intervention on the merits of the case & do the needful.— Priyank Kharge (@PriyankKharge) March 15, 2017
Sachit Singhi's e-mail to investors, including Avnish Bajaj and Rajinder Balaraman of Matrix Partners, and Anup Gupta and K G Subramanian of Nexus Venture Partners, sent at 6.10 pm on Tuesday (March 14) said that Vasupal was in trouble and needed help.
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"We need help. Yogi (Yogendra) is missing!!!.Last we think we know is that he is at the station of Commissioner of Police, Egmore...Not sure what's happening with Yogi and we have not known his whereabouts for last 3 hours now. And I think even I will be in custody soon."
Stayzilla has raised $33.5 million from Nexus, Matrix, Indian Angel Network, Vertexperts Consulting, Splice Capital and InnoVen Capital.
In a blog post last month, Vasupal had written about the decision to revisit the business model of the start-up.
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"I would like to announce today that we would be bringing to a halt the operations of Stayzilla in its current form, and looking to reboot it with a different business model. This has been one of the toughest decisions that I have taken so far but it is the right thing to do.
"The hardest part is saying goodbye to a perfect team that has accomplished a lot by putting homestays on the map of India. I am the most fortunate to have had such a team on my side at this juncture. Whatever and how much ever I write about them is not going to do justice to their commitment. But try, I must!"