SUMMARY
Trell’s cofounders Agrawal, Rebba, and Lodhi are under investigation on grounds of financial irregularities
A cohort of investors, who remain unidentified, ordered a forensic audit of Trell with EY India
The investigation might see the upcoming funding round worth $100 Mn fall through
trell
’s cofounder Pulkit Agrawal sent a note to the startup’s investors that could spark a chain of events similar to the BharatPe saga, questioning the nature of a forensic audit of the startup’s finances.
Notably, a cohort of investors ordered a forensic audit of Trell with EY India. According to Agrawal, the exercise was not authorised by either the company or its board of directors.
Currently, the identity of the investors who ordered the audit is still under wraps. However, Trell can count H&M Group, Sequoia Capital India, Mirae Asset, KTB Network, Beenext, Fosun and Samsung Venture Investment among its top institutional investors.
Agrawal wrote in a note, “(The founders) will not take a hit on their reputation lying down. If forced, we will do all that is within our command to protect our reputation and interest of the company and its shareholders.”
Founded by Agrawal, Bimal Kartheek Rebba, Arun Lodhi, and Prashant Sachan (who exited the company in mid-2020), Trell is a social commerce platform. The startup allows users to create content related to beauty or lifestyle products and post it on the platform.
Trell makes money from its ‘Trell Shop’, which is an ecommerce marketplace that lists more than 600 beauty and lifestyle products from brands such as Mamaearth, Lakme, and so on.
The startup also takes a cut from collaborations between brands and content creators. The brands pay the influencers to review their products, and that allows users to make informed purchase decisions.
Recently, Trell’s cofounders Agrawal, Rebba, and Lodhi are under investigation on grounds of financial irregularities. What’s more, EY India has already submitted an interim report about the irregularities.
An Inc42 source cited in a previous report on the matter has said that the investigation might see the upcoming funding round worth $100 Mn fall through, which will adversely impact Trell’s unicorn ambitions.
In July 2021, Trell raised $45 Mn in a Series B round of funding led by financial group Mirae Asset, H&M Group and co-led by LB Investments. Existing investors such as KTB Network, Samsung Ventures, and Fosun RZ Capital have also participated in this round.
However, the startup has recently seen its losses widen significantly. Trell has incurred a loss of 78.4 Cr loss in FY21. This is an almost 550% increase from the losses it had incurred in FY20.
While the startup posted revenue from sales worth INR 10.8 Cr in FY21, a significant jump from INR 14.17 Lakh in FY20, its expenses climbed to 90.14 Cr in FY21. Trell had posted total expenses of INR 12.46 Cr in FY20.
As per its financial records, the startup has incurred a total of INR 91.56 Cr between FY17 and FY21. During this time, it has also raised a total of INR 463 Cr across more than three rounds.
Media reports also suggested that the startup will also be laying off employees. However, the number of employees who will be impacted are currently unknown.
An Entrackr report highlighted that Trell might lay off close to 300 employees. The supposed resizing will happen shortly, the report hinted.
With this shaky financial situation, news of layoffs, and the boardroom controversy, Trell has got a storm at its hands, one it will have to duke out.
