Caastle, a startup that launched as a plus-size clothing subscription service in 2011 and later became an inventory monetization platform for clothing retailers, is facing financial difficulties, the company confirmed with TechCrunch, following an Axios report.
Axios reported that the company was mostly short on money, citing a letter from the board of directors, and CEO Christine Hunsicker resigned from her CEO role and the board, and the company involved law enforcement to investigate alleged financial misconduct.
The company also confirmed with TechCrunch that it had attacked all its employees.
“The Board is deeply disappointed by the actions that led to this moment. Our immediate focus is on addressing the company’s challenges, supporting employees, and maintaining the value of technology and business operations. We regret that we have to temporarily furry our employees, but we believe this will put the company in our best position to successfully recover from the current situation.
Caastle has raised more than $530 million in total, with its final round of $43 million in 2019, with Pitchbook estimates.
In that letter, also cited by Pack, the board alleges that Hunsicker misinterpreted at least some of the company’s investors about the company’s capital and outstanding stocks, including financial performance, and two “forged” audit opinions.
Both Axios and Puck report that a few days before Hunsicker left the company, she was in a fundraiser and claiming the company’s healthy finances.
Axios points out that if a board complaint leads to a case of fraud committed against the founder, this will be one of the biggest cases to date.
Last week, Charlie Javice, founder of Startup Frank, a student loan application that JPMorgan purchased for $175 million, was found guilty of fraudulent banks. The bank claimed Javice had inflated its customer numbers. However, Caastle’s investments are triple.
While this may not be a typical startup shutdown experience, experts tell TechCrunch that 2025 is on the way forward when another brutal year for a failed startup.