A messaging app start-up that raised $200M from SoftBank and others is closing down due to the fact that 95% of its users were phony
Two years earlier, a messaging app start-up called IRL reached a $1.2 billion appraisal in a $170 million Series C financing round led by SoftBank Vision Fund 2. Boasting of its “unicorn status” and keeping in mind that it had actually raised more than $200 million to date, the business explained itself as “the leading group messaging social network that brings people together through events and shared experiences.” CEO Abraham Shafi mentioned, “Our primary goal at IRL has always been to create more authentic and organic communities.”
Just how genuine those neighborhoods were entered into concern in 2015 when workers called into question Shafi’s claims that the app had 20 million month-to-month active users.
Fast forward to today and the endeavor is closing down, confessing that those claims had actually been inaccurate—to put it slightly. The board of directors concluded after an examination that 95% of the users were “automated or from bots,” as The Information reported on Friday.
“Based on these findings, a majority of shareholders concluded that the company’s going forward prospects are unsustainable,” a representative informed the outlet, stating the endeavor would close down.
Earlier this year, a previous worker declared that IRL—the name represents “in real life”— had actually fired him after he voiced issues that numerous users were bots, and in April Shafi resigned as CEO. The Securities and Exchange Commission had actually currently started an examination into whether the business had actually breached securities laws in the method it represented its organization efficiency to financiers, to name a few problems.
Leaders from other start-ups fasted to weigh in on the business’s failure.
“Building a real business without fraud means it’s nearly impossible to reach ‘unicorn status’ in a few years time,” tweeted Winnie CEO Sara Mauskopf, whose business uses a market for childcare.
“Lots more stories like this coming. The insanity of the last 3 years is going to lead to a bad hangover,” tweeted Sean Byrnes, formerly CEO of Outlier.ai, adding, “Oh, man, the number of times I’ve been asked why my company isn’t growing as fast as X and then found out X was a fraud all along.”
“The overnight unicorn that the media loves to prop up and VCs love to throw $$ into just is not a thing,” tweeted Squad creator and CEO Isa Watson.
At its peak more than year earlier, IRL had about 100 workers, The Information reported, and it had actually likewise raised capital from Funders Fund, Goodyear Capital, and Floodgate Fund.
“We have the opportunity to build WeChat for the rest of the world,” Shafi informed The Verge in 2021, describing the messaging app in China that has more than a billion users.
It appears safe to state IRL won’t arrive.
