Skip to content

Stayzilla – How the startup failed miserably, putting the founder behind bars

Before Airbnb started, India was ahead of it with its own Airbnb named Stayzilla, however, later the shut down and the founde
Before Airbnb started, India was ahead of it with its own Airbnb named Stayzilla, however, later the shut down and the founder was put behind bars.

Airbnb is one of the most successful chains of hosting people for homestays in the whole world, with tie-ups with thousands of hotels and homeowners. But before Airbnb could start, India was ahead of it with its own Airbnb named Stayzilla. It began in 2005 by Yogendra Vasupal and fellow college-mate Sachit Singhi, where people could put up their homes for rental space for travelers and host them.

The market for such ideas was fresh and free of competition, and they had done their research that the Indian “stay” market needs a significant overhaul. There were problems for visitors that booking stays in Tier 1 and Tier 2 cities without mediators was a tough task. India was still at the brink of the digital revolution, and the internet was not a common space, and hosting the service on the internet was a gamble.

Stayzilla – The online homestay booking portal

For the initial 5-6 years, Stayzilla had operation issues as the platform was running on the savings that were accumulated by the founders. The founders were making decent profits on the investments, and Stayzilla had a steady run, but this grew their ambitions, and they decided to gather funding.

Stayzilla founder – Yogendra Vasupal

Four rounds of funding later from 2013 to 2016, Stayzilla bagged $34 million in funding, and these were gathered because of venture capitalists and investors like Matrix Partners, Sequoia Capital, and Nexus Venture Partners.

2014 was significant for them as they had 15,000 stays and a network with 11,000 cities in India. By 2016, they were collaborating with state tourism departments, undertaking eco-tourism initiatives, and expanding CSR initiatives.

The ‘earthquake’ that shook Stayzilla

In 2017, the firm took a hit, and the company decided to shut its operations, and they planned to start it with a different business model. The cut-throat in the market had led to significant changes in the travel sector in India, and they wanted to give the company a fresh look. What was supposed to be a pause turned out to be a ban on the company as the founder – Yogendra Vasupal was put behind bars for defaulting payments as high as Rs. 17.2 million.

Doll received by Sachit Singhi
Doll received by Sachit Singhi

Apart from this, co-founder Sachit Singhi received life threats in the form of a voodoo doll that was delivered to him with a photo of his son and a note which read “The most special way to say you care”.

The reasons behind this debt were that the company offered huge discounts, and the investors gave them deadlines to pay back the money, and when the founder failed to do so, imprisonment was the show stopper for Stayzilla. Yogendra Vasupal was later granted bail by the Madras High Court and was told to deposit Rs 40 lakh with the court to establish bonafide intentions.