India's GoMechanic lays off 70% of workforce as funding crunch persists due to misstated facts
GoMechanic, an India-based auto-service startup backed by Sequoia India, has laid off 70% of its workforce as the company faces a funding crunch.
The company, which offers services such as car repair and car washing, has been struggling to raise funds for over a year despite reaching advanced stages of negotiations with several investors.
GoMechanic has raised a total of $62 million in over 7 funding rounds, and was last valued at $283 million post-money. Their latest funding was raised on June 7, 2021 from a Series C round.
In early 2022, GoMechanic was in talks to raise a round of funding led by Tiger Global at a valuation of over $1 billion, however, the talks did not materialize due to discrepancies found during the due diligence process.
Also, a probe into the startup by EY found scores of issues including inflated revenue and fictitious garages, leading to a recent funding round being abandoned by Soft Bank.
The remaining staff were also informed to work without pay for three months, according to Indian news outlet The Morning Context.
GoMechanic's co-founder, Amit Bhasin, acknowledged the issues in a LinkedIn post and stated that the startup made "grave errors in judgement as we followed growth at all costs, particularly in regard to financial reporting" and that the company is now restructuring and looking for capital solutions.
