IRL’s founders, Abraham Shafi and Genrikh Khachatryan, have sued their investors, claiming they intentionally sabotaged the company.
At its peak, IRL was poised to become an event planning alternative for Generation Z, who were using Facebook less and less.
Shafi was the CEO hanging From the IRL in April to investigate allegations of misconduct. In June, IRL’s board of directors discovered during its investigation that 95% of the company’s 20 million users were fake. Now, the founders claim that their investors made up the 95% “as an excuse to shut down the company and return capital to shareholders.”
The lawsuit specifically names Goodwater Capital’s Chi-Hua Shin, SoftBank’s Serena Dayal, and Floodgate’s Mike Maples. From these investors, the social calendar app has raised more than $200 million, reaching a valuation of $1.17 billion; SoftBank in particular led a $170 million IRL Series C round in 2021. Shafi and Khachatryan accused investors of wanting to shut down the company because they “stand to cover the lion’s share of the company’s $40 million in cash.”
IRL no longer exists, but remaining board members deny the founders’ claims.
Shortly after Shafi’s comment, IRL saw a significant drop in daily active users overnight. “This was not due to an outage,” the IRL and its board of directors wrote in a statement, which IRL spokesman Elliot Sloan shared with TechCrunch. In the same report, Showing that 95% of users were fake, they also found “suspicious user behavior including the existence of millions of private groups with duplicate names and irregular sign-ups from Hotmail and Yahoo email addresses in addition to traditional email addresses,” the statement said. The forensic report showed extensive use of IP addresses from proxy servers, and individual accounts hopping across IP addresses and device types, which are signs that user behavior was inauthentic.
“Based on this, combined with evidence of Shafi’s misappropriation of company funds and repeated interference with the investigation, the board concluded – after months of review – that the company’s future prospects were unsustainable,” the statement concludes.
As of last December, the Securities and Exchange Commission (SEC) is conducting a process Ongoing investigation IRL may mislead investors and violate securities laws.
IRL is just the latest startup to previously come under fire for potentially rigged metrics. One-click payment giant Bolt and co-founder Ryan Breslow faced an SEC investigation after investors raised concerns that Bolt misrepresented the company’s financial health when it tried to raise $355 million in its Series E round. 15 months ago, the SEC told the company it would do so He will likely never be charged. Earlier this year, the Securities and Exchange Commission accused student financial aid company Frank of defrauding JPMorgan, which bought the company for $175 million in 2021. JPMorgan filed a lawsuit alleging that Frank’s founder, Charlie Javis, Fake millions of customers to convince the bank to buy them. a company.
Lawsuit IRL by TechCrunch On Scribd