CaaStle, a startup initially established in 2011 as a subscription service for plus-sized clothing, and later evolved into an inventory monetization platform for clothing retailers, is currently facing financial challenges. This information was confirmed by the company to TechCrunch following a report by Axios.
Axios, drawing from a letter issued by the board, reported that the company is nearing financial insolvency. CEO Christine Hunsicker has stepped down from her role as CEO and left the board. Additionally, the company has engaged law enforcement to investigate alleged financial misconduct.
TechCrunch also confirmed that CaaStle has furloughed all of its employees. In a statement emailed to TechCrunch, the company expressed its disappointment with the actions that led to the current situation. The board emphasized its focus on addressing the challenges, supporting employees, and maintaining the value of its technology and business operations. The company noted that the decision to furlough employees temporarily is aimed at better positioning it to recover from the current circumstances.
According to PitchBook estimates, CaaStle has raised over $530 million in total funding, with its last funding round drawing $43 million in 2019.
The letter, also referenced by Puck, alleges that Hunsicker misled some investors about the company’s financial health, capital, and outstanding shares. This involved purportedly “falsified” audit opinions.
Reports from both Axios and Puck indicate that days prior to Hunsicker’s departure, she was actively fundraising, making optimistic claims about the company’s financial condition.
Axios further noted that if the board’s allegations culminate in a fraud case against the founder, it would represent one of the largest such cases historically.
In a related context, last week, Charlie Javice, founder of the student loan application startup Frank, was found guilty of defrauding JPMorgan, which had acquired the startup for $175 million. The bank accused Javice of inflating customer numbers. Comparatively, the investment figures for CaaStle are threefold larger.
While the situation at CaaStle may not reflect a typical startup shutdown, experts informed TechCrunch that 2025 is anticipated to be a challenging year for failed startups.
