In what could be a replay of the boardroom battle at BharatPe, social commerce startup Trell Co-Founder Pulkit Agarwal shot a fiery letter to investors last week questioning the nature of a forensic audit that was conducted by EY India. In the letter, Agarwal claimed the audit was not ordered by the company or the board but by a cohort of select financial backers.
A forensic team from EY India, which conducted a detailed investigation into the finances of the Bengaluru-based startup, had submitted an interim report, The Economic Times reported on March 12. The EY India team has been looking into alleged financial irregularities and related party transactions by its founders.
What’s happening at Trell?
Pulkit Agrawal, Arun Lodhi, Prashant Sachan and Bimal Kartheek Rebba founded Trell in 2016 as a community-based social network, which soon became India’s fastest-growing lifestyle community-commerce platform. Trell pivoted to a lifestyle-centric short video app, before entering into video commerce model in 2021. Sachan moved out of Trell the same year to build his spiritual and devotional tech startup AppsForBharat.
The company was in talks with e-commerce giant Amazon and a clutch of investors over raising $150 million in January this year, Moneycontrol reported. Existing investors, Mirae Asset and fashion retailer H&M, were also likely to invest, the report said. Sequoia Capital India, KTB Network, Beenext, Fosun and Samsung Venture Investment are the other top institutional investors in Trell.
However, talks were stalled on the back of an audit carried out by EY in early March, The Economic Times reported.
“There is an investigation underway on related party transactions and its scale in the company,” a source told ET. According to sources, the team was looking into an issue surrounding the monthly transacting users and revenues, the details of which will be submitted in the final report.
Pulkit’s wrath
Pulkit Agrawal refuted the allegations and sent a fiery note to the company’s angel and existing investors, saying what started as an inspection by an investor has now turned into a ‘witch hunt.’
He said the founders were not just financially invested in Trell, but emotionally involved in the company as well.
“(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,” the note reviewed by The Economic Times said.
Talks of job loss
Amid the probe, news emerged of the influencer-led social commerce startup planning to lay off 40-50 percent of its workforce.
“Trell is likely to lay off close to 300 people with immediate effect,” Entrackr reported quoting sources. The company has 700 employees, of which 500 work full time.
An employee told Moneycontrol that Trell was waiting for the board’s decision for restructuring internally. Meanwhile, the company has sent an internal communication to its employees, asking them not to panic.
