About Me


Utilizing this digital window to share my understanding of the funder and founder relationships and….
several other things that intrigue me!

97% of Indian Small & Medium Businesses were paid late in 2015

Let me repeat that number… NINETY SEVEN PERCENT!!!

So when I read that the CEO of Stayzilla was arrested because  his advertising agency took him to task for skimping out on their invoices totaling up to Rs 1.72 crores ($300k)! I do not wish to comment on the facts of the case but the report did mention that the CEO has confessed so – I am glad he was arrested.
This should be a warning bell for all entrepreneurs big or small that skimping out on paying your bills can take you to jail. From Kingfisher Airlines to LocalBaniya the media archives are filled with stories of businesses that continued operations by creating temporary funding situations for them.
The modus operandi is to late pay vendors, sell the loan inventory at huge discounts to customers and create temporary liquidity that can be used to take on further liabilities which the company cannot pay because the entrepreneurs know that the business was going under – sooner or later.
Unfortunately his isn’t just a Indian problem (but India’s record is one of the worst) because SMEs in the United Kingdom and the United States of America are grappling with similar issues. The situation is UK is particularly astonishing as the outstanding invoices have touched 38,186 pounds per firm!
The option of going to court isnt feasible for small entrepreneurs as the judges are overburdened with a multitude of cases and justice can be delayed for years if not decades. Also starting legal proceedings against the client kills any opportunity of future business so while the supplier grapples with making ends meet the defrauding client is busy flying all across the globe or holding lavish weddings and parties and announcing the launch of new business verticals. How the unethical entrepreneurs sleep at night is a mystery to me.
We have had to come up with innovative ways to get large corporates to pay bills that were left unpaid in our hotels in Ahmedabad or in our consulting business. On one instance, I called up a debt rating and asked them to open an investigation into a company that they had rated triple A but had left my bill unpaid for 2 years. To counter the standard privacy argument I bought a few shares of the company and asked the list of documents they had checked before arriving at their rating because as a shareholder I can request access to the same documents.
The rating agencies have a nexus with their client is a well known fact so these ratings are bought (and not given). I made a safe gamble that they hadn’t checked the accounts of the company and it paid off as the company’s CFO called our accountant and cleared the dues in a couple of days after the debt rating agency reached out them asking for more info!
The arrest of the Stayzilla CEO should be a reminder to an old Hindi proverb to all entrepreneurs:

जितनी लंबी चादर हो उतने पैर फैलाओ

(Spread your legs only as long as sheet will cover them)

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