Social commerce startup Trell is looking to sell its 10% stake in spiritual and devotional tech startup AppsForBharat as it mulls options to raise money and keep operations going, amid a probe into financial impropriety by its current management.
"They need the money to stay afloat and this is among the options they are considering," a person familiar with the development said. A second person said that with its funding round scuttled and an audit underway, it needs to raise money in other ways to survive.
While Trell did not offer any comments on the development, AppsForBharat co-founder Prashant Sachan said he has not received any communication about it. "Trell is a financial investor and there is no right of first refusal (ROFR) clause. These shares are freely transferable so I don't need to be notified about it," he said.
Sachan, one of the original founders of Trell, branched out to start up AppsForBharat a couple of years ago. It develops mobile and web apps to address spiritual and devotional needs, a thriving market in India. It had raised $10 million in a Series A round in September last year led by Elevation Capital, with participation from Sequoia Capital, BEENEXT and Matrix Partners India. It was last valued at a little over $46 million, so even if Trell finds a buyer, it stands to make $4.6 million or less, as this will be a secondary sale of shares.
"It might seem like a small amount but they need the runway till they are able to raise a new round", one of the persons cited above said. It has also been cutting costs and laying off employees in the last few weeks. Trell initially got a 17% stake for Rs 85,000 in AppsForBharat, but later diluted it to 10% when the latter closed its funding round.
Trell was founded in 2016 by Pulkit Agrawal, Arun Lodhi, Prashant Sachan, and Bimal Kartheek Rebba. It is a community-based social network to discuss and exchange lifestyle trends. It pivoted to an influencer-led social commerce platform in 2021, entering the live commerce space where competition is heating up and the burn rate is high.
Moneycontrol reported on January 27 that the company was in talks to raise $150 million from a clutch of investors that would value the company at $1 billion. But these talks stopped as a preliminary audit by Ernst & Young found financial irregularities and related party transactions by the founders.Earlier this month, Trell started laying off employees including content developers and affiliate specialists. The company’s employee strength also grew over the last couple of years, from a couple of hundred to close to 800. Trell raised $45 million in July 2021 at a valuation of $120 million and its investors include H&M Group, Sequoia Capital India, Mirae Asset, and KTB Network.