Sequoia India-backed GoMechanic cuts 70% jobs after making ‘grave errors’ • TechCrunch

GoMechanic has laid off a significant number of its workforce as the Sequoia India-backed startup struggles to raise funds amid serious concerns of accounting troubles, a source familiar with the matter told TechCrunch.

The Gurgaon-headquartered startup has cut 70% of the workforce and asked the remaining staff to work without pay for three months, Indian news outlet The Morning Context reported Tuesday, citing unnamed sources.

GoMechanic did not respond to a request for comment on Tuesday, but offered some explanation on Wednesday. (Updates below.)

The move comes as GoMechanic has struggled to raise funds for over a year despite advanced stages of discussions with several investors. The startup was in talks early last year to raise a round of funding led by Tiger Global at over $1 billion valuation, TechCrunch reported.

The talks did not materialize into a deal after some discrepancy was found during the due diligence process, the source said. The startup later engaged with a number of investors, including Malaysia’s Khazanah to raise a large round.

This round is also unlikely to go through, as serious discrepancies have been found in its books, the source said, requesting anonymity speaking to the press. A recent probe into the startup, which counts Tiger Global among its backers, found that several of its garages were fictitious, among other issues, the source said.

In a LinkedIn post, 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.”

“We take full responsibility for this current situation and unanimously have decided to restructure the business while we look for capital solutions. This restructuring is going to be painful and we will unfortunately need to let go of approx. 70 percent of the workforce. In addition, a third party firm will be conducting an audit of the business. While the situation is far from anything we could have ever imagined for Go Mechanic, we are working on a plan which would be most viable under the circumstances.”

The story was updated with GoMechanic founder’s comment.