It is totally ridiculous - they cannot bar you from coding in your spare time. Instead of having a "startup" have a "hobby". Don't say a thing to anyone you work with about this, find someone else to be the public face of your "hobby" if you get to the point you need someone to do that, and by no means use your employer's time or equipment to work on your "hobby". Also IANAL, and you should talk to one, stat.