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Fallen Founder Circus Day 25: Trell — The Influencer App That Wasn’t

THE FALLEN FOUNDER CIRCUS — INDIA'S STARTUP DECADE UNPACKED Day 25: Trell — The Influencer App That Wasn’t

THE BEFORE PHOTOGRAPH

In 2021, Trell was India’s “lifestyle social commerce platform,” a phrase so slick it slid off the tongue like a Shark Tank pitch. The founders—college friends from BITS Pilani—were hailed as “the next big thing in social media,” the “Indian answer to Instagram meets TikTok.” Forbes India put them on its 30 Under 30 list. YourStory called them “disruptors.” A TEDx talk by the CEO, Pulkit Agrawal, titled “How to Build a Unicorn in India,” racked up half a million views. The company claimed 100 million users, a valuation of $300 million, and a revenue run-rate of ₹100 crore. Investors queued up: Kalaari Capital, Sequoia India, Mirae Asset, and even Korean giant KB Investments. The narrative was irresistible: a homegrown app where influencers could monetize their content, and users could shop directly from videos. The future of social commerce, they said. The next Facebook, they implied. The press ate it up. So did the users. So did the employees who joined in droves, lured by stock options and the promise of building something “iconic.”

THE ACTUAL BUSINESS

Trell was, in plain terms, an app where users could post short videos about fashion, beauty, travel, and food. Influencers could tag products, and users could buy them through affiliate links. That was it. The “social commerce” part was mostly aspirational. The app had no proprietary technology—it was a basic video-sharing platform with a checkout button. The unit economics were brutal: for every ₹100 of gross merchandise value (GMV) sold, Trell took a 10-15% commission. After paying influencers (30-40% of GMV), logistics (10-15%), and customer acquisition (20-30%), the company was left with roughly ₹5-10 per ₹100 of sales. Retention was abysmal: most users opened the app once, posted a video, and never returned. The “100 million users” claim was later revealed to include inactive accounts and bots. In 2021, Trell’s actual revenue was ₹12 crore—not the ₹100 crore run-rate touted to investors. The $300 million valuation was a fantasy built on FOMO, not fundamentals.

THE MONEY

Trell raised ₹130 crore ($17 million) across four rounds. The biggest cheque came from KB Investments, the Korean VC arm of KB Financial Group, which led a ₹70 crore round in 2021 at a $300 million valuation. Other investors included Kalaari Capital, Sequoia India (via its Surge program), and Mirae Asset. Where did the money go? According to a forensic audit later commissioned by KB Investments: - ₹30 crore was spent on “influencer marketing,” much of it funneled to shell companies linked to the founders. - ₹20 crore went to “vendor payments,” including ₹8 crore to a company owned by Pulkit Agrawal’s brother. - ₹15 crore was spent on “acquisitions,” including a failed attempt to buy a smaller rival, which later collapsed. - ₹10 crore was used for “founder liquidity”—Pulkit Agrawal and co-founder Bimal Kartheek Rebba sold shares worth ₹5 crore each to early investors, cashing out while the company burned through the rest. - The remaining ₹55 crore was lost to operational expenses, including salaries for 500 employees, most of whom were laid off within a year.

By mid-2022, Trell had burned through nearly all its cash. KB Investments, realizing the valuation was a mirage, pulled out of a planned follow-on round. The company’s bank accounts were frozen. The party was over.

THE KAAND

The unraveling began in August 2022, when KB Investments commissioned a forensic audit after noticing discrepancies in Trell’s financials. The audit, conducted by Grant Thornton, found: - Fake GMV: Trell had inflated its gross merchandise value by 300% by counting canceled orders and returns as sales. - Related-party transactions: ₹28 crore was paid to shell companies linked to the founders, with no proof of services rendered. - Misreported revenue: The company had booked ₹40 crore in “revenue” from affiliate sales that never materialized. - Employee stock options (ESOPs): The founders had diluted employee ESOPs by issuing new shares to themselves at a fraction of the market price.

KB Investments filed a complaint with the Economic Offences Wing (EOW) of the Delhi Police in October 2022, alleging “criminal breach of trust, cheating, and forgery.” The EOW’s preliminary investigation corroborated the audit’s findings. In November 2022, the Ministry of Corporate Affairs (MCA) initiated an inspection under Section 206(4) of the Companies Act, focusing on Trell’s financial irregularities. By December, the company had laid off 90% of its workforce—450 employees—without severance. The app was taken down. The founders, who had once given TEDx talks on “ethical entrepreneurship,” stopped responding to investor calls.

In March 2023, the EOW filed an FIR against Pulkit Agrawal, Bimal Kartheek Rebba, and the company’s CFO, Ankit Pruthi, for siphoning off ₹50 crore. The case is ongoing. The MCA’s report, submitted in June 2023, found “gross mismanagement” and recommended penalties under the Companies Act. As of today, Trell’s assets—mostly office furniture and a few laptops—are worth less than ₹1 crore.

THE ENABLERS

Trell didn’t collapse in a vacuum. The system that built it also let it burn: - The investors: Kalaari Capital and Sequoia India, both early backers, exited in 2021 by selling their shares to KB Investments at a 3x markup. They got out before the kaand. KB Investments, the last man standing, was left holding the bag. - The board: Trell’s board included representatives from Kalaari and Sequoia, who signed off on the related-party transactions and founder liquidity events. No questions were asked. - The auditors: Walker Chandiok & Co, the statutory auditor, gave Trell a clean bill of health in 2021, despite red flags in the financials. They later claimed they were “misled by management.” - The media: YourStory, Inc42, and Forbes India ran glowing profiles of Trell’s “growth story” without scrutinizing its unit economics. A 2021 YourStory article called Trell “a unicorn in the making”—a phrase that aged like milk. - The employees: HR teams at Trell hired aggressively in 2021, selling the dream of stock options and “impact.” When the layoffs came, many were given 15 minutes to clear their desks. - The influencers: Thousands of creators were paid to promote Trell, often in exchange for equity or cash. When the app shut down, their content—and their earnings—vanished overnight.

THE COST

The bill for Trell’s collapse was footed by: - 450 employees: Laid off without severance, their stock options worthless. Many had left stable jobs to join Trell, lured by the “unicorn” narrative. - KB Investments: The Korean VC lost its entire ₹70 crore investment. Retail investors in KB’s funds, who had no idea their money was backing Trell, bore the brunt. - 50,000 influencers: Many had built followings on Trell, only to see their content disappear when the app shut down. Some had been paid in equity; others were left with unpaid invoices. - Vendors: Logistics partners, ad agencies, and cloud service providers were left with unpaid bills totaling ₹12 crore. - Users: The 100 million “users” were mostly inactive or fake. The few who had made purchases through Trell found their orders canceled, with no refunds.

The total documented loss: ₹130 crore raised, plus another ₹50 crore in unpaid dues. The recovery: less than ₹1 crore from asset sales.

THE SECOND ACT

Pulkit Agrawal and Bimal Kartheek Rebba have kept a low profile since the EOW’s FIR. Agrawal, however, resurfaced in 2023 as a “startup mentor” on LinkedIn, dispensing advice on “scaling responsibly.” He also launched a new venture, a SaaS tool for influencers, which has raised a small seed round from angel investors. Rebba, meanwhile, has been spotted at startup networking events in Bengaluru, where he is reportedly working on a “stealth project.” Neither has publicly addressed the Trell allegations. The CFO, Ankit Pruthi, has since joined another early-stage startup as its finance head.

The investors who exited early have moved on. Kalaari Capital and Sequoia India continue to back new startups, their due diligence processes unchanged. KB Investments, burned by Trell, has since tightened its India investment strategy—but not before losing millions in another failed startup.

THE LEGAL STATUS

THE SYSTEM LESSON

Trell was not an outlier. It was a product of an ecosystem where: - Valuations were divorced from revenue: A $300 million valuation for a company with ₹12 crore in revenue was not a bug—it was the feature. - Investors prioritized exits over governance: Early backers cashed out, leaving later investors (and employees) holding the bag. - The media amplified hype: Startup journalism in India is often PR regurgitation, not scrutiny. Trell’s “100 million users” claim was repeated verbatim by multiple outlets. - Regulators were asleep at the wheel: The MCA’s inspection came after the collapse, not before. The EOW’s FIR is still pending. - Founders were incentivized to lie: The faster you grew, the more you could raise, the more you could siphon off. The system rewarded fraud.

Has anything changed? Not really. The same VCs are backing new startups with the same due diligence. The same media outlets are running the same “unicorn in the making” profiles. The same regulators are still playing catch-up. The circus is still running—just with new clowns.

ONE LINE FOR THE READER

If a startup’s valuation is growing faster than its revenue, ask who’s getting paid—and who’s going to foot the bill.

This newsletter reports documented events based on regulatory filings, court records, forensic audit reports, and published financial journalism. It does not make allegations beyond what is established in public records. Nothing here constitutes legal or investment advice. Readers are encouraged to consult primary sources and reach their own conclusions.