Amit Bhasin, the co-founder of startup GoMechanic , admitted to financial reporting errors on Wednesday.
GoMechanic manipulated its financial records by exaggerating revenues after it secured a massive $42 million in funding two years ago, according to media reports. As a result, investors ordered a forensic audit and a business restructuring that will result in the firing of 70 per cent of the company’s 1,000 or so employees.
Leading investors in the startup include Sequoia Capital, Tiger Global, Orios Venture Partners, and Chiratae Ventures. The company’s investors were informed of the major errors in its financial reporting recently.
A statement by investors read, “We are deeply distressed by the fact that the founders knowingly misstated facts, including but not limited to inflation of revenue, which the founders have acknowledged.”
The remaining staff will work without pay for the next three months, said the automobile after-sales service startup.
Bhasin claimed in a post on LinkedIn that founders got “carried away” in their pursuit of opportunities to develop. A forensic audit of the company’s books has been ordered to determine the extent of the financial misreporting.
GoMechanic is a business that connects car owners with local auto repair shops. On its website, it also offers original spare parts and car accessories. It was started in 2016 by Bhasin, Kushal Karwa, Nitin Rana, and Rishabh Karwa.
Now to survive, the startup needs to raise money, with about a third of its debts due soon.
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