Trell’s Finances being Investigated by EY India

According to four sources with firsthand knowledge of the situation, an EY India forensic team is now conducting a detailed investigation into the finances of influencer-led social commerce startup Trell and has given an interim report.

The consultancy firm’s staff is investigating into alleged related party transactions by its founders, as well as other financial irregularities, they added.

Trell’s board of directors will most likely act on the EY report in the coming weeks, they added.

The alleged discrepancies have put a halt to Trell’s existing $100 million investment round, for which negotiations with ecommerce powerhouse Amazon were also ongoing.

“An inquiry into related party transactions and their size in the corporation is ongoing,” a person briefed on the subject said. “During the due diligence process, there appeared to be an issue with the monthly transacting customers and revenues, but those facts will be obvious in the final report,” another source added.

According to the sources, the claims could have an influence on the company’s values and the fresh investment round.

According to an existing investor who has received a copy of the email, cofounder Pulkit Agrawal rejected the charges in an email to his angel and existing investors.

“Trell is genuinely committed to all of its stakeholders and to expanding the social commerce environment as well as the creative economy,” Trell cofounder and chief operating officer Bimal Kartheek Rebba Stated.

“We perform a standard review, just like any other startup or corporate in India.” This is normal procedure for organisations to audit their business controls, and once completed, the team will seek to resolve any issues and reinforce systems and processes,” Reeba stated.

According to EY’s forensic team, it does not share information about specific organisations.

The company has gained traction as a result of the unprecedented boom in the content-to-commerce segment, where most direct-to-consumer businesses in industries such as beauty and personal care, fintech, personal finance, and travel have been utilising influencer-led marketing solutions to reduce customer acquisition costs and boost revenues.

When it secured $45 million in July last year from Mirae Asset Venture Investments, H&M, KTB Network, Samsung Ventures, and Fosun RZ Capital, the six-year-old company was valued at $120 million.

Samsung Ventures, Ankur Nagpal (CEO of Teachable), Gokul Rajaram (board member – Pinterest, Square, DoorDash), Vineet Buch (former head of Google Play Store development), and Sequoia’s Surge are also investors.

Trell, founded by Arun Lodhi, Prashant Sachan, Agrawal, and Rebba, is a mobile app that allows users to create and share three-minute films about their interests and passions, such as beauty, food, fashion, personal care, technology and gadgets, movies and TV reviews.

Sachan has since founded his own company, AppsForBharat, in which Trell is a minority shareholder.

The software is accessible in over 20 different categories and eight different regional languages.

Trell generates money by selling beauty and lifestyle products from Plum, Mamaearth, Lakme, Bombay Shaving Company, and The Man Company on his website “Trell Shop.”

It also makes money by promoting collaboration between marketers and content creators who review products, allowing customers to make informed purchasing decisions.

Individual and institutional investors told that they were unconcerned about the nature of the charges and dismissed them as a normal process.