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But something I need to do. But what?

Provide your feedback in a "constructive way", and be done about it. Not your place to make decisions.

Mention something along the lines of

"It was good to get a chance to evaluate the product X. As I see it:

- Pros: 1, 2, 3

- Cons: 1,2,3,4,5,5,6,7,8......

As it is evident from the analysis above, the list of cons overwhelms the list of pros, overall, I'd not be inclined to use this.

There might be better alternative which could have a reverse result of the given assessment, please let me know if you'd need me to work on that."

You were invited to the meeting (and the demo, I guess), and you have a fair idea of the ups and downs. You report them, solely based on the merits and demerits. Leave the decision making part to the people who are taking them.

At a later point of time if it comes back in the form that "even-after-new-tool-why-productivity-is-down" argument, well, you'll have your "proof".

If you believe that a coworker is operating in cronyistic manner and playing fast and loose with company funds, yes, that is something you should raise with your manager.

Saying the software is "crap" is not likely to get you much traction. You must quantify how it is substandard, and how the business will not get the appropriate value for money. Just as you are annoyed that your teamleader is not objective, you must be objective yourself.

For example, you can contrast this "crap" software with competitor offerings. You could also estimate the value to the code base in saved man-hours.

It's possible you were invited along to provide the illusion of objectivity. If your "teamleader" picked you because he knew you may be "cautious" to bring up this with your manager, and thus he gets implicit validation from your presence.

"@GraySheep was there and he didn't raise any concerns"

You don't want to be silent and have the truth to come out.

But something I need to do. But what?

First thing constructive to do is to check your motivations carefully, why do you need to do something? Why do you want to engage in a dispute that you think you will lose.

If you're asked to analyse a tool, do so, give the pro's and cons without bias. Don't create problems without complete analysis or reason.

Rewrite the letter you were going to send your boss.

Don't assume bad intentions from your coworker.

Be polite. Be specific. Drop the word "crap". Give your honest but detailed evaluation and be able to back up every point you raise, and ideally put an example of each point in the letter.

Boss,

I've reviewed the code being offered and I view it as sub-standard for the following reasons...

1) Reason #1. Reason for thinking this is a problem. Example.

(Sample) 1) There are no comments in the code. They have X lines of code. I did a grep search and found a grand total of Y comment lines. For perspective our current code base has...

Talk about it with your colleague/unofficial teamleader.

You think he knows your opinion about the topic but it may not be this way.

He invited you to the meeting which means he values your opinion. (I assume here that he didn't invite you to taunt you because your high opinion on the good working climate)

Tell him directly that the software he wants to introduce would, in your opinion, hinder further development of the project.
The cause for his support for the software in question might be personal, which he should overthink.
If this isn't the case ask him to explain to you why he thinks the software will improve the development.

A normal discussion about work related topic which does affect your work shouldn't cause danger to your employment or social status in your company.
It might even improve because you show compassion for your work.

But most importantly: You do it professional.

EDIT1: If your colleague does not show any kind of good reasoning talk about it with your manager afterwards. Maybe propose a three-way discussion to get the topic dealt with fast.

(Good) management is influenced by logic, not name-calling. Reading your OP, you have mentioned that you think this software is crap, but you didn't say how or why. If I was a manager and I read your OP, I would think you were just a troublemaker, and you would lose face with me. If this is how you wrote the email to management, then it's a good thing you didn't send it.

What you want to do is lay out, plainly and objectively, what your objections are. Maybe you have a use case that this software doesn't satisfy? Maybe the software is too slow or doesn't meet other benchmarks? Maybe the support isn't there for it, so technical issues that arise would be hard to resolve? Maybe it's just plain buggy? Whatever the problems are, explain them in a clear and detailed way to management. Don't use words like "crap" or "horrible" or whatever; those are weasel words and don't mean anything. Outline your concerns, and let your concerns speak for themselves.

You call this software "crap" a couple of times, so you clearly know a thing or two about what it does, and what your company actually needs. Write up a document (email) outlining your concerns about the features / functionality, and send it to your boss.

I would suggest also offering alternatives, such that you're not simply coming across as jealous, or negative. Make a table analyzing features, pricing, etc.

Some options that don't share the same risks are X, and Y. The pricing for X is a little higher than the option proposed by John, but offers these advantages: ...

At the very end of the email you may include a phrase along the lines of:

As you can see, there are solid reasons why we should continue looking for a product to fill this niche. Furthermore I fear that John's decision to recommend this software may be influenced by the fact that a close personal friend of his created it.

You may want to hold that tidbit of information in reserve just in case you have to escalate, however.

Your colleague has a conflict of interest. You should discuss this with the other members of your organization, and make sure that the software is properly evaluated by a party without vested interest and free from undue influence.

If his friend doesn't work for the company, then injecting his buds software into the company's workflow is simply a conflict of interest. Pointing that out would help a lot.

I'd also explain to my boss why this software is crap and I'd try to provide some cost benefits analysis of using it. I'd even go so far as to attempt to show how much money the company will lose from the lost development time dealing with the unmaintainable can of worms your team lead's friend is trying to pass off as code. That should help too.

You are going above your team leads head though, so this likely won't have the greatest impact on your career at your current company. You're a dev though; you can always get another job, that will probably come with a pay raise, so you shouldn't be scared in situations like these.