Numerous instances in the startup landscape involve companies facing breakdowns, with diminishing investor trust and co-founders departing amid allegations of financial irregularities. An emblematic case is that of Trell, a once-promising social e-commerce startup now potentially on the verge of collapse.
Though the company has refrained from formally announcing closure, its financial statements foretell a grim future. Revenue from operations plummeted by 94% to Rs 4.77 crore in FY23, down from Rs 80.6 crore in FY22, according to its annual financial statements filed with the Registrar of Companies (RoC).
Formerly a social commerce platform, Trell pivoted to a lifestyle-centric short video app in early 2023. Commissions were the primary revenue source, dwindling by 94.7% to Rs 2.23 crore in FY23 from Rs 42.37 crore in FY22. Other income drivers, including advertising, e-commerce, and logistics, also experienced significant declines in FY23.
The company underwent substantial layoffs during FY23, reducing employee benefit costs by 69% to Rs 33.7 crore from Rs 108.2 crore in FY22. Ad spending was restricted by 95.3% to Rs 11.3 crore in the last fiscal year.
Various overheads, such as legal-professional, technical-engineering, communication, and others, contributed to the overall expenditure, amounting to Rs 64.3 crore in FY23, a significant decrease from Rs 413 crore in FY22.
With a revenue of Rs 4.7 crore in FY23, Trell incurred a loss of Rs 58.6 crore during the same period. The EBITDA margin worsened to -941.4%, and on a unit level, the company spent Rs 13.48 to earn a rupee in FY23.
Trell, having raised over $60 million, was reportedly in talks with Amazon for a new round at a unicorn valuation in early 2022, but the deal fell through. In 2023, early backer Peak XV Partners exited with a nearly 80% haircut.
In response to queries, a Trell spokesperson stated, “We are pivoting our business model from social commerce and figuring out the next phase of the journey with our investors.”
Despite reports of financial irregularities and challenges in scaling the short video approach, Trell’s recent pivot underscores the importance of adapting quickly, even in the face of setbacks.
