Looks like Healthcare startup Mojocare cooked its books and has now fired 80% of its employees
Mojocare to scale down business after reports of financial irregularities. Photo: Mojocare, DailyO
The Indian startup winter isn't ending. Mojocare, a Bengaluru-based health and wellness startup, is the latest one facing a storm. Investors at Mojocare have unearthed financial irregularities at the company and since then have fired almost all of its employees.
Reports say that nearly 200 employees have been fired from the startup. Their Slack IDs and emails were disabled without any prior notice.
Moneycontrol reported that there are only 40 employees left at the startup to pare down the business.
What happened?
- Mojocare says that its business model has been unsustainable and hence they are scaling it down.
- However, Morning Context reported that Mojocare had been cooking its books for a while to show higher revenue growth.
- Mojocare was reportedly paying fishy vendor partners related to the founders, but so far there is no evidence of money being siphoned out of the company.
- Mojocare has denied all allegations of money being taken out of the company.
- Founded in 2021 by IIT graduates Ashwin Swaminathan and Rajat Gupta, Mojocare is yet another company backed by Peak XV Partners (formerly known as Sequoia Capital India) that is facing allegations of financial misconduct.
Looks like Ex India franchise of #sequoia needs a strong finance team.
— Piyu Dutta (@PiyuduttaPiyu) June 18, 2023
And a short term proper course in business ethics from a reputed institution.
Quite a shame to see a common thread across most of its investments. #mojocare #ethics
- Other Peak XV Partners-backed startups facing financial scrutiny include BharatPe, GoMechanic, Zilingo, and Trell.
- Mojocare had recently raised about $20 million in a series of funding led by B Capital Group, a venture firm of Facebook cofounder Eduardo Saverine. Before that, it had raised $3 million.
- On the other hand, Peak XV Partners has promised to take more measures to address compliance issues at its portfolio startups.
What next?
- Moneycontrol reported that Mojocare founders have confessed to inflating sales due to pressure of meeting revenue targets. Investors are reportedly not looking to take legal action.
- Investors are looking into how Mojocare can return 50-60% of the $23 million it had raised.
Strife within Mojocare comes at a time when several Indian startups are facing issues with regard to their sales practices, corporate governance, and more.
The Indian startup winter
Byju's has been at the centre of several controversies regarding its sales practices, which allegedly include threatening parents and illegally acquiring children's phone numbers. Byju's is also in hot waters with its stakeholders for failing to file its financial statements.
Then there was the very public spat between BharatPe executives and co-founder Ashneer Grover and his wife Madhuri Jain Grover over alleged misuse of company funds.
The trend seemingly shows a deep mistrust between the founders and the investors and also the inability of the investors to notice the misdeeds of the companies before it is too late.