Japanese investment giant SoftBank has lost millions of dollars on a social app called IRL, which was forced to shut down after it was revealed that 95% of its user base was fake.
IRL was founded in 2017 as an event-organizing alternative to Facebook. The app allowed users to create and attend events in their local area. SoftBank invested over $170 million in IRL in 2019, valuing the company at $1.17 billion.
However, IRL’s growth stalled in 2020 due to the COVID-19 pandemic. The app pivoted to online events, but it was unable to attract enough users to be profitable. In 2022, IRL laid off most of its staff and announced that it would be shutting down.
The SEC has launched a probe into whether IRL misled investors about its user base. If the SEC finds that IRL did mislead investors, SoftBank could face fines or other penalties.
This is not the first time that SoftBank has lost money on a venture. In 2019, SoftBank invested $100 million in a robot pizza maker company called Zume. Zume filed for bankruptcy in 2020.
Despite these losses, SoftBank still owns various technology companies, including Uber, Alibaba, and DoorDash. The company is reportedly looking to raise $40 billion in new funding.
The shutdown of IRL is a setback for SoftBank, but it is not the end of the company’s investment in social media. SoftBank is still an investor in other social media companies, such as TikTok and Snap.
The news of IRL’s shutdown comes at a time when the social media industry is facing increasing scrutiny. In recent months, there have been a number of high-profile scandals involving social media companies, including the Cambridge Analytica scandal and the spread of misinformation on Facebook.
The shutdown of IRL is a reminder that the social media industry is still in its early stages of development, and that there are risks associated with investing in these companies. However, it is also a reminder that the social media industry has the potential to be a major force in the world and that there are still opportunities for investors who are willing to put their money on the line.