Social app IRL shut down in June, but SoftBank — which led the platform’s $170 million Series C in 2021 — is now suing the company for $150 million.
IRL told the world it had 20 million monthly active users, but an internal investigation later revealed that 95% of them were fake. According to SoftBank, those “impressive user numbers” encouraged them to invest, hence the fraud lawsuit.
Full TechCrunch+ articles are only available to members.
Use discount code TCPLUSROUNDUP to save 20% off a one- or two-year subscription.
Because “younger startups are now increasingly getting caught in the act” when it comes to misleading investors, Rebecca Szkutak asked several VCs about the red flags they look for while assessing a pitch and performing due diligence.
“There are 100 metrics they can show you, and they will pick the four that will make them look the best,” said 37 Angels founder Angela Lee. “Our job as a VC is to ask about the other 96.”
Thanks for reading,
Editorial Manager, TechCrunch+
Beat the clock: 6 smart ways startups can use lawyers effectively
Legal firms can charge startups anywhere from $175 to $500 per hour, and the fee structures aren’t always straightforward.
One founder who racked up $150,000 in legal costs in a single quarter was forced to explain the expense to a team of investors that included angel Marjorie Radlo-Zandi.
“He told us the fees were for documents involving business formation, funding, various agreements, and intellectual property registrations,” she writes in TC+.
“Not everything you do requires a lawyer: You simply need to know when to engage your attorney, how much to spend, and when to do it yourself.”
The best apps are taking a page from mobile gaming
It’s growing more difficult to hang on to mobile app subscribers, but in Saturday’s TechCrunch Exchange newsletter, Anna Heim covered a report showing that “paywall optimization and gamified UX can help.”
Since 2022, “average mobile subscription prices have been growing month over month across all subscription tiers,” according to a study released by Adapty, a mobile subscription management platform.
6 startup founders gaze into a future-of-work crystal ball
We’re still figuring out the Future of Work. The rules for how we recruit, train, retain and even fire employees seem to change from day to day.
To learn more about how remote work has evolved over the last few years, Haje Jan Kamps interviewed six founders in the sector “about working from home, returning to the office, and finding hybrid solutions that fall somewhere between the two.”
- Barnaby Lashbrooke, founder and CEO, Time etc.
- Alexander Embiricos, CEO, Multi
- Phil Libin, CEO, Mmhmm
- Sophie Ruddock, COO, Multiverse
- Matt Martin, CEO, Clockwise
- Mandy Price, CEO, Kanarys
Get the TechCrunch+ Roundup newsletter in your inbox!
To receive the TechCrunch+ Roundup as an email each Tuesday and Friday, scroll down to find the “sign up for newsletters” section on this page, select “TechCrunch+ Roundup,” enter your email, and click “subscribe.”
Taking another look at venture debt
Haje Jan Kamps interviewed recent TC+ guest contributor David Spreng (author of “All Money Is Not Created Equal”) to learn more about why venture debt is “an option for growth-stage companies with more predictable cash flow.”
Spreng, the founder and CEO of Runway Growth Capital, said his firm provides late-stage debt financing for startups that need just enough cash to crest the next hill.
“We position ourselves as being the latest stage, least risky provider of this type of capital,” he said. “We look for a real business that has real products, that isn’t going to go out of business and isn’t contingent on whichever VC happens to be behind it.”
4 ways generative AI makes founders more interesting to journalists
I manage TechCrunch+’s guest contributor program. Here are three of the most common reasons we reject submissions:
- It’s too promotional.
- It covers a general trend or a basic best practice that’s already well understood.
- It consists of “thought leadership.”
Hot takes, conventional wisdom and infographics will not help your startup gain media traction. Reporters are looking for actual expertise and opinions supported by facts and relevant experience.
“Startups that want to be seen amid the flurry as AI enters the media will need to remember that what most people really want is a human story,” says Craig Corbett, partner at PR agency Publicize.