A San Francisco startup is shutting down after an internal investigation showed that the company's user numbers were massively inflated.
Legally known as Get Together, Inc., IRL is shutting down after an investigation by is board found that 95% of its users were fake.
The company's board of directors unanimously voted to "dissolve the business" and transfer its assets to Sherwood Partners, a Santa Clara-based financial management and advisory firm, which will help develop a plan for liquidating the company's remaining cash, a public relations representative for IRL told me via email.
"A majority of shareholders concluded that the company’s going-forward prospects are unsustainable," Elliot Sloane of ThroughCo Communications said. The news was first reported by The Information.
The startup's name is slang for "in real life" and it had created a messaging-based social media platform where users could make plans, share photos, create polls and chat with friends, in addition to messaging.
A couple of years ago, co-founder and CEO Abraham Shafi told the San Francisco Business Times that IRL had grown its active user base tenfold in less than a year to 12 million. By early 2022, the company was boasting 20 million users, according to a lawsuit filed by a former employee.
IRL's board reportedly launched its own investigation and confirmed that the company has grossly inflated its user numbers.
The startup had raised around $200 million since 2016 from investors including SoftBank which led a $170 million Series C round in 2021, when its valuation also skyrocketed to nearly $1.2 billion, up from just $57 million in less than a year, according to PitchBook.
Its other investors, according to PitchBook, included Dragoneer Investment Group, Kleiner Perkins, Founders Fund and Floodgate Fund.
Shafi was suspended as CEO in April and was replaced by Scott Kauffman. The Securities and Exchange Commission was also reportedly investigating IRL for securities fraud by late 2022.
The company had 89 employees, according to LinkedIn.
It's far from the only Silicon Valley that was caught misleading investors, customers and reporters. So-called growth hacking, or using fake-it-till-you-make-it strategies, have long been a tech industry mindset.
Blood testing startup Theranos stands out as one of the most egregious examples. Founder and CEO Elizabeth Holmes began an 11-year prison sentence in May for her role in the fraud, and president Ramesh "Sunny" Balwani was sentenced to 13 years at the end of 2022.
Tech news sites were reporting that Snap had 100 million users by August 2014 and possibly as many as 200 million by early 2015. But in a 2017 pre-IPO filing with the SEC, Snap reported that it ended 2014 with 74 million active users and didn't cross 100 million until late 2015.
Facebook, Uber, Google and Twitter have also been accused of inflating various metrics over the years.
Startups that closed in 2022
S.F.-based Pragli, also known as Pesto, was developing office productivity software to enable virtual meetings. The co-founders announced that the company would shut down on Nov. 12. They founded it in 2019 and raised $6 million, according to PitchBook.
Image provided by Getty Images (Johnny Greig)
Palo Alto-based Kittyhawk, the autonomous aircraft developer backed by Google co-founder Larry Page, announced in September that it was winding down its operations and laying off its workforce. It raised an estimated $75 million, according to PitchBook.
Sunnyvale-based Omnee, also known as Omnify, was creating location-based analytics for places like malls and shopping centers. The company raised $2.8 million since 2018 and shut down in September, according to PitchBook.
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Self-cleaning glass technology company InnovaSonic filed for Chapter 7 bankruptcy protections in September. The Dublin-based company raised $260,000 since 2016, according to PitchBook.
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San Mateo-based home buying company Reali laid off its entire workforce, or 140 people, and shut down in August. It raised $160 million since 2015, according to PitchBook.
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Sonoma-based spirits manufacturer Haus announced in August that it was shutting down after an investor pulled out of a funding round, according to the SF Chronicle. It raised $8.5 million since 2019, according to PitchBook.
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Nexkey was developing smart locks for keyless entry, but the San Mateo company shut down in August and raised just over $10 million since 2013, according to PitchBook.
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Mountain View-based Presdo was developing a management and analytics platform for events. It was founded in 2007 and had raised $3.1 million before shutting down in August, according to PitchBook.
Cinova was optimizing video for streaming. It had raised $18.5 million since 2005 and shut down in August, according to PitchBook.
Short-term rental startup WanderJaunt shut down in July, impacting as many as 200 workers and sending users with active reservations scrambling. It had raised $57 million since 2016, according to PitchBook.
Provided by WanderJaunt
Mountain View-based Veriphyr Inc. filed for Chapter 7 protections in July. The company developed software to help health care provider comply with privacy laws.
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The Redwood City biotech filed for Ch. 11 bankruptcy in July, according to the WSJ, and in September, a bankruptcy court approved the sale of Genapsys's assets to a group of investors for $42 million, according to Law360.
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San Mateo-based SummerBio launched in 2020 and developed an automated system to process Covid-19 tests quickly but in June announced it was shutting down and laying off its entire workforce. In August, the company said it was going into "standby-mode." It raised a little over $7 million, according to PitchBook.
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Palo Alto-based Carfit was developing a way to monitor vibrations in a car to predict maintenance needs. The company shut down in May and raised just under $7 million since 2016, according to PitchBook.
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Founders Den, a networking and co-working space for startup founders based in San Francisco, filed for Chapter 7 bankruptcy in May. It was founded by Jonathan Abrams, Jason Johnson (pictured on the right), Michael Levit and Zachary Bogue.
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Ontera, a Santa Cruz diagnostics company, was developing a hand-held device with biosensors. It shut down in April and had raised just over $65 million since 2011, according to PitchBook.
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Mountain View-based Athenascope was developing a tool to make it easier for gamers to grab gameplay highlights. It shut down in April and raised $12.3 million since 2018, according to PitchBook.
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MySupport was building a platform for seniors and people with disabilities to connect with service providers. The S.F. company raised just over $1 million since 2014 and shut down in April, according to PitchBook.
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San Jose-based MIODx was developing a diagnostics platform centered around adaptive immune response. It raised $1.5 million since 2014 and went out of business in April, according to PitchBook.
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Berkeley and Fresno-based Zero Grocery was building a grocery delivery marketplace focused on reducing plastic waste that partnered with local producers, but shutdown in March a month after announcing a $12 million seed round.
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Based in Palo Alto, Mesmer Eyes was developing AI-powered bots intended to help accelerate product development and testing. The company raised $19 million since 2017 and shut down in March, according to PitchBook.
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Mountain View-based Matter was a platform for musical artists to monetize their work. The company raised $650,000 since 2018 and shut down in June, according to PitchBook.
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Redwood City-based Voiq was founded in 2011 and shut down in March, according to PitchBook. The company was developing conversational AI assistants for customer services and sales.
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USB Promos created promotional USB products. It raised nearly $4 million since 2006 and shut down in March, according to PitchBook.
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S.F.-based Plethora was creating a "manufacturing-as-a-service" business. It over $47 million, including debt, since 2013 and shut down in March, according to PitchBook.
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Wage was developing employment and income verification tools but the Palo Alto company shut down in March, according to PitchBook. It had raised $5 million since 2018.
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Visbit was developing a streaming video platform that would maintain high definition even over wireless networks. The Sunnyvale company raised $8.2 million since 2015 and shut down in February, according to PitchBook.
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Akora Labs was developing a tool called Shuffle for sharing podcast clips. The S.F. company was founded in 2020, raised $2 million and shut down in February, according to PitchBook.
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Multerra Bio was developing diagnostics devices that could be used for multiple tests. The S.F. company was founded in 2015 and raised $3.5 million before shutting down in January.
The Consumer Financial Protection Bureau sued Oakland-based loan startup LendUp in 2021 for violating a 2016 consent decree and engaging in "illegal and deceptive marketing." It shutdown down its main operations in January 2022, according to PitchBook, and its parent company, Ahead Money, reportedly started liquidating its assets in August, according to Protocol. It had raised nearly $375 million, including debt, since 2012, according to PitchBook.
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