Amit Bhasin, the auto aftermarket start-up, co-founded GoMechanic on Wednesday admitted errors in financial statements, then a forensic audit was ordered and the restructuring of the business was ordered. implemented will cause 70% of the 1,000 workforce to be laid off.
Almost two years after raising a whopping $42 million in funding (approximately Rs. 340 crore), it seems GoMechanic has cooked up its financial books by inflating sales.
“Our passion for surviving the inherent challenges of this sector and capital management, has taken hold of us and we misjudged growth at all costs, including related to the financial statements, which we deeply regret,” he wrote without giving details of the false reporting.
A forensic audit was required to assess the extent of the financial misreporting.
Besides cutting staff, the startup is said to have asked the remaining employees to work without pay for the next three months.
“We took full responsibility for the current situation and unanimously decided to restructure the business while seeking capital solutions,” Bhasin wrote.
“This restructuring will be very difficult and unfortunately we will have to lay off about 70% of the workforce. In addition, a third-party company will conduct an audit of the business.” Saying that while the situation is far from anything the founders could have imagined, GoMechanic is working on a plan that works best under the circumstances.
Bhasin along with Kushal Karwa, Nitin Rana and Rishabh Karwa founded GoMechanic in 2016 as an auto repair startup that connects car owners with repair service providers in the area. their area. It also sells original auto parts and accessories on its website.
The startup is backed by major investors including Sequoia Capital, Tiger Global, Orios Venture Partners and Chiratae Ventures. In June 2021, it raised $42 million in a Series C funding round from Tiger Global, Sequoia Capital India and others.
“GoMechanic investors were recently made aware of the company’s founders of serious inaccuracies in the company’s financial statements. We are deeply saddened that the founders attempted to misrepresentation of facts, including but not limited to the revenue inflation acknowledged by the founders,” a statement from major investors said.
They said the investors had jointly appointed a third-party firm to investigate the matter in detail.
“We will work together to determine the next steps for the company,” it added.
With loans of Rs. 120 crore and about a third due, the Gurugram-based startup will have to raise capital to survive.
“We founded GoMechanic in 2016 to bridge the gap between process-authorized service centers and cost-effective local workshops for those looking for a great auto repair experience In a short period of time, we were able to form a startup that provided a “network of tech-enabled automotive service centers that conveniently delivered our services. convenient with just one touch,” Bhasin wrote on the blog.
The company’s drive to create a convenient, affordable, and reliable experience has helped the company win the trust of its customers.
“We are fortunate to have the support of a large number of investors in this journey. We have come a long way, from starting with a few hundred clients to expanding our business tiered. multiplier to serve more than 7,000 customers to date,” he said.
“As entrepreneurs, we identify problems, come up with solutions, and explore every opportunity to develop those solutions to fill unmet needs. But in this case, we were blown away. gone to.” He continues to ask for the support of well-wishers.