CaaStle, a startup initiated in 2011 as a subscription service for plus-sized clothing and later evolved into an inventory monetization platform for clothing retailers, is currently experiencing financial challenges. These difficulties were confirmed to TechCrunch following a report by Axios.
A letter from the board, cited by Axios, reveals that the company is nearing a depletion of funds. In light of the situation, CEO Christine Hunsicker has resigned from her position and the board, and law enforcement has been engaged to examine alleged financial misconduct.
The company has also confirmed to TechCrunch that it has furloughed all of its employees. In an emailed statement to TechCrunch, the company expressed disappointment in the conduct that led to the current situation. The Board’s immediate focus is on addressing the company’s challenges, supporting its employees, and preserving the value of its technology and business operations. The decision to furlough employees temporarily is believed to position the company better for recovery.
CaaStle has raised a total of over $530 million, with its most recent funding round amounting to $43 million in 2019, according to estimates by PitchBook.
In the letter referenced by Puck, the board alleges that Hunsicker misled some of the company’s investors regarding financial performance, the company’s capital, outstanding shares, and included two “falsified” audit opinions. Both Axios and Puck have reported that days before Hunsicker’s departure, she was engaged in fundraising activities, claiming the company was in a strong financial position.
Axios has noted that if the board’s allegations culminate in a fraud case against the founder, it could become one of the largest such cases ever recorded. Last week, Charlie Javice, founder of the student loan application startup Frank, which was acquired by JPMorgan for $175 million, was found guilty of defrauding the bank by inflating customer numbers. However, the investment amounts involved in CaaStle’s case are three times larger.
While this company’s experience may not be typical of startup shutdowns, experts have informed TechCrunch that 2025 could potentially be another challenging year for startups facing failure.
