Kult: Rahul Yadav's Wife, Karishma's Beauty Platform Collapsed With Links To Him, Now Raises USD 20M

Rahul Yadav, a renowned name in the business world, never skipped a chance to break the headlines, as he has always been controversies' favourite child. Rahul, known as the 'Bad Boy Of Startups', has been behind companies like 4B Networks, Broker Network, and Housing.com, but he has been accused of mismanagement, including not paying salaries to his employees, financial misconduct, and more.

Well, Rahul came into the limelight again as recently his wife, Karishma Singh's beauty marketplace, Kult claimed to have a fresh raise of 20 million dollars. Recently, INC42 has revealed the story of Kult through information, and revelations by company's employees.

Rahul Yadav's wife, Karishma Singh's beauty platform, Kult: How it collapsed, now in 3rd phase while raising USD 20M

Kult's official operations began in 2022, and it grabbed the attention instantly, with 4 lakh users and monthly 40,000 orders in just two years, with huge discounts on products, as reported. Well, this rapid growth also grabbed a whole lot of attention. Sources revealed to INC42 that this rapid growth of Kult could have been caused by its ties with Rahul's company, Broker Network, which has been under investigation from 2022 to 2024.

In 2023, when the Economic Offences Wing started an investigation on Broker Network, Kult's rapid success fell apart as reportedly it owed Rs. 40 crore from beauty brands like, Huda Beauty, Estee Lauder, smaller D2C, and influencer-based brands. Accusations were rife that the employees of this company were also left unpaid, along with the unpaid taxes.

When Kult recently announced a raise of 20 million dollars from the M3M family office and Venture Catalysts, it came as a little relief to those from whom the platform owed in crores, as reported. However, a recent investigation by INC42 found several gaps in Kult's story, along with discovering the allegations that Rahul has been using the platform's funds for his own ventures.

Karishma Singh's dream to build a stand-out beauty platform, which happened through a web of companies

Rahul Yadav's wife, Karishma Singh launched Kult back in 2017, but there had been a web of companies that followed, leading the operations to begin only in 2022. In 2017, Karishma reportedly started Kult Cosmetics Pvt. Ltd, which never launched. Talking to INC42, Karishma said that it has always been her dream to launch a beauty platform, that won't stand out on discounts or so but on technologies. Well, it was in 2021, when Kult Cosmetics was renamed as Aceuser Private Limited, which happened six months after Rahul's Broker Network was launched. In 2022, the Kult App was launched finally and its operation began, and it was in 2024, when Kult E-commerce was launched that took over Kult's operations.

The series of losses that Kult faced in three years, which was over Rs. 100 crores

In 2021, Karishma Singh launched Kult, but the app was only available on ios, which was a deliberate step by the founder, as she felt that this step would help her to build a loyal customer base, as the iOS users are most likely to use premium beauty brands, rather than Android users. Well, the step worked in the platform's favour, courtesy of the huge discounts. However, despite all of it, Kult started facing losses. By FY22, it had a revenue of Rs. 2.2 lakhs, but losses were in crores, while in FY23, although the revenue was in crores, the losses were far more than that.

In FY24, it was claimed that the employees even were left unpaid, and while Kult had revenues of Rs. 8 crore, the loss was of a total Rs. 53 crores. In these three years, the loss cost up to Rs. 121.3 crores, with the total revenue crossing only Rs. 10 crores, which raised the question about the funds that Kult was getting and its sources, since there were no external investors till then. In 2021, Karishma revealed that family and friends helped Kult to bring premium brands to India, but later, in 2023, investigations showcased that the funds were initiated from RY Advisory, which is linked to Rahul Yadav.

Kult got Ashish Chandna as an investor, but later he cut ties with the company, allegedly due to Rahul Yadav

In 2023, Ashish Chandna chipped in to be an investor of Kult, and made a deal to invest Rs. 20 crore, being 40 percent stakeholder. He had already invested Rs. 18 crore and started being connected to the daily operations that were being done in Kult. Well, tension began when reportedly Rahul Yadav, who doesn't have any professional link or position to Kult started giving orders in the company and even making big decisions. It was also reported by INC42 that Ashish was being pressurised to invest more money, and even Rahul owed personal money from him.

Rahul was reportedly using Kult's funds to settle RY Advisory’s dues. Ashish wanted to invest money with strict action, as he was uncomfortable with the overspending of Kult in creating fancy offices and more. But his account was frozen due to an investigation, following which he cut off ties with Kult. In 2024, Kult started an internal audit, and if the report is to be followed, the results showed that it owed Rs. 9 crore from various non-corporate sources, with all the funding still coming from RY Advisory.

Kult's collapse and reboot as Kult 3.0, which claimed to have no connection to Rahul Yadav

Apart from all of these happening, NBFC Capri Global had a legal notice ready for Kult for their unpaid interest of Rs. 30 lakh. With Kult giving Rs. 15 crores and more to RY Advisory without any interest and owing the government Rs. 5 crores for TDS and GST, the collapse began. Kult also left employees unpaid, and the amount exceeded Rs. 15 crore, with many claiming not to have been paid since December 2023. Along with Ashish Chandna stepping out from Kult, it was asked to stop operations in mid-2024.

After Kult's collapse, Rahul Yadav and Karishma Singh tried to reboot it again through Kult E-commerce, and they were in talks about the same even before the original app was shut down. The recent Kult E-commerce, which also goes by Kult 3.0, is claimed to be AI-powered, and Karishma reportedly revealed that Rahul had no connection to it. The M3M Family Office reportedly stepped in to fund Kult's E-commerce and now became its majority shareholder.

What do you think about Kult's beginning, collapse, and rebirth?

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