Investors Initiate Forensic Audit of Mojocare's Financial Statements
Key Highlights :
A clutch of investors, including Peak XV Partners (erstwhile Sequoia India), Chiratae Ventures and B Capital, had initiated a review of the said financial statements of Mojocare. Investors in Mojocare have recently revealed irregularities in the healthcare and wellness startup's financial statements and the company is now scaling down operations due to its unsustainable business model. A joint statement issued by the investors, who include Chiratae Ventures, B Capital, and Peak XV Partners, said that a majority of them had initiated a review of the company’s financial statements. Initial findings uncovered financial irregularities and it became apparent that the business model was not sustainable due to various operational and market factors.
Mojocare joins the likes of BharatPe, Zilingo, Trell, GoMechanic and Rahul Yadav’s 4B Networks, all of which were found to have lapses in their financial reporting over the past year. The company announced a job cut on Saturday and said it was laying off 150 to 170 staffers to improve its unit economics and better its capital efficiency. Chiratae Ventures is the largest shareholder in Mojocare, while B Capital has invested the highest amount.
The startup had raised about $20 million led by the B Capital Group, a venture capital firm set up by Facebook cofounder Eduardo Saverin in August 2022. Existing investors Chiratae Ventures, Surge and Better Capital had also participated in the round. Prior to that, it had raised a little over $3 million. Mojocare runs a direct-to-consumer business to address issues like reproductive health and fertility, hair care and weight loss through its online platform, which offers products and consultations with doctors for customised treatment plans.
Employees who have been retained have mixed feelings about the events that have unfolded over the weekend. Though anxious, they are also waiting to hear from management on Monday on the way ahead, they said. While the audit findings are yet to be released, multiple employees ET spoke to said that in recent times the leadership had been inconsistent and opaque with their updates on revenue growth.
Mojocare was founded in May 2021 by Ashwin Swaminathan and Rajat Gupta. Swaminathan, an Indian Institute of Technology (BHU) graduate of 2016, was previously an investor with Chiratae Ventures for a little over two years. Gupta, on the other hand, is an IIIT Hyderabad alumnus from the 2003 batch, headed marketing at Mobile Premier League, Times Internet and also worked at Ogilvy.
Investors in Mojocare have initiated a forensic audit of the company’s financial statements, which has revealed irregularities and that the business model is not sustainable. The startup is now scaling down operations and the investor group is working with the company through its transition. The company did not respond to ET’s request for comments on the matter.
It is yet to be seen how the investors will handle the situation and what the future holds for Mojocare. However, it is clear that startups need to be more careful when it comes to financial reporting and corporate governance. It is also important for investors to be more vigilant and ensure that their investments are not misused.
