News: GoMechanic slashes 70% jobs amid ‘grave errors’ in financial reporting

Entrepreneurship

GoMechanic slashes 70% jobs amid ‘grave errors’ in financial reporting

The Gurgaon-headquartered startup has also told the remaining staff to work without pay for three months.
GoMechanic slashes 70% jobs amid ‘grave errors’ in financial reporting

GoMechanic has laid off 70% of its workforce as the Sequoia India-backed startup struggles with a funding crunch after the existing and prospective investors found that the founders had misstated facts.

The Gurgaon-headquartered online car servicing platform has also told the remaining staff to work without pay for three months.

The company, which offers auto-services such as repairing and carwashing, is under severe financial constraints due to its difficulty to raise funds for over a year despite reaching advanced stages of deliberations with several investors.

The company was in talks early last year to raise a round of funding led by Tiger Global at over $1 billion valuation, according to reports.

 The talks did not materialise into a deal after some discrepancy was found during the due diligence process, a source said.

The firm later engaged with a number of other investors, including Malaysia’s Khazanah to raise a large round. Khazanah was positioning to lead the round whereas SoftBank was also looking to participate.

This new round is no longer proceeding as serious discrepancies have been found in its books, sources said.

In a joint statement, GoMechanic investors said the startup’s founders recently informed them of the “serious inaccuracies in the company’s financial reporting.”

In a LinkedIn post on Wednesday, GoMechanic co-founder Amit Bhasin said the startup made “grave errors in judgement as we followed growth at all costs, particularly in regard to financial reporting, which we deeply regret.” 

 

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Topics: Entrepreneurship, #Layoffs

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