Two years ago, a messaging app startup called IRL reached a $1.2 billion valuation in a $170 million Series C funding round led by SoftBank Vision Fund 2. Boasting its “unicorn status” and noting that it had raised more than $200 million to date, the company described itself as “the leading group messaging social network that brings people together through events and shared experiences.” CEO Abraham Shafi stated, “Our primary goal at IRL has always been to create more authentic and organic communities.”
Just how authentic those communities came into question last year when employees cast doubt on Shafi’s claims that the app had 20 million monthly active users. Fast-forward to today, and the venture is shutting down, admitting that those claims had been incorrect, to put it mildly. The board of directors concluded after an investigation that 95% of the users were “automated or from bots.”
Elliot Sloane, a spokesperson for IRL, confirmed that the company will be dissolved and a majority of its assets will be moved into a liquidating trust.
“The shareholders elected to take this action — proposed by the Board — as a result of a Special Committed investigation that found that 95% of identified users were in fact automated or from bots, not authentic human users among other findings. Based on these findings, a majority of shareholders concluded that the company’s going forward prospects are unsustainable.”
Perhaps the final blow: Earlier this year, a former employee alleged that IRL, the name stands for “in real life”, had fired him after he voiced concerns that many users were bots, and in April Shafi resigned as CEO. The Securities and Exchange Commission had already begun an investigation into whether the company had violated securities laws in the way it portrayed its business performance to investors, among other issues.
Sloane added that the Silicon Valley firm Sherwood Partners will help with a “plan of liquidation” to distribute the company’s remaining cash. The IRL website is still active, but the app has been removed from the iOS app store. (It is still available on the Google Play Store for Android devices.)
IRL’s parent company, Live Awake, also operates the meme-making app Memix, which appears to still be active. According to Shafi’s LinkedIn, his connection to Memix has also ended as of June 2023.
