This startup raised 200 million euros – t3n – digital pioneers

The app had significantly fewer users than stated. (Photo: Shutterstock/Ground Picture)

The startup developed a messenger app and became a unicorn with a financing round of 200 million euros. However, it has now turned out that most of the users were not genuine.

Two years ago, the startup IRL raised around 200 million euros in an investment round led by Softbank Vision Fund 2. With this considerable amount, the company reached a valuation of 1.17 billion euros and thus achieved unicorn status.

IRL claimed to have 12 million monthly active users on its messenger app. But now, after an investigation by the board, it turns out that 95 percent of these users were fake accounts, like the magazine fortune reported.

A spokesman for IRL told the information: “Based on these findings, a majority of shareholders have concluded that the future prospects of the company are not sustainable.”

In other words, it means that the company will close its doors. Just two years ago, CEO Abraham Shafi proclaimed, “Our main goal at IRL has always been to create more authentic and organic communities. So we want to evolve the way people interact with groups and events online.”

But now it turns out that the communities at IRL were neither authentic nor organic. Shafi already left as CEO in April.

Later that year, a former employee made allegations against IRL, claiming that he was fired for raising concerns about the many bots.

The Securities and Exchange Commission is already investigating the company to determine whether using fake users violates securities laws. These may have misrepresented the company’s performance and thus misled investors and shareholders.

The revelation that a majority of IRL’s users were fake has severely shaken trust in startups. It not only raises questions about the integrity of the company, but also doubts about the effectiveness of investment rounds and startup valuations.