Mojocare, a healthtech startup, is currently facing the possibility of winding down its operations and returning money to investors, following the revelation of financial irregularities [1][2][3]. The company’s board has scheduled a meeting on July 12, where the topic of discussion will revolve around the future course of action and the return of capital to investors [1].
According to a forensic audit report conducted by Deloitte, Mojocare’s founders were found to have inflated both revenues and expenses [1][2][3]. Internal presentations to investors showcased exaggerated revenue and sales figures, while inflated expenses were used to justify losses despite higher revenues [3]. However, no evidence of the founders siphoning money for personal gains was found [3]. These irregularities have led to a significant loss of trust among investors, resulting in the need to wind down the business [2].
The board of Mojocare is expected to explore various options during the meeting, including the possibility of a fire sale similar to GoMechanic [1]. However, most investors are inclined towards supporting the closure of operations instead [1]. Additionally, Mojocare is also considering consolidation with a larger player in the industry as an alternative [2]. If neither of these options proves viable, the company plans to return the remaining funds to its investors [2].
Mojocare had previously raised $24 million from prominent investors such as Chiratae, B Capital, Sequoia India’s Surge, and Better Capital [2]. The company was valued at around $70-75 million before the financial irregularities came to light [2]. Unfortunately, these irregularities also led to significant layoffs, with over 80% of the workforce being affected [2].
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The case of Mojocare highlights the issue of poor corporate governance and fake revenue-expense numbers prevalent in some Indian startups [2][3]. Other companies facing similar scrutiny include BharatPe, Zilingo, Trell, GoMechanic, and 4B Networks [3]. Even Byju’s, India’s most valued startup, is currently under scrutiny due to investor departures and audit delays [3].
In conclusion, Mojocare’s board meeting on July 12 will play a crucial role in determining the future of the startup. With financial irregularities exposed, the board will discuss winding down operations and returning money to investors [1][3]. This decision aims to restore investor confidence and uphold transparency within the industry [3].
References: [1] Inc42 [2] Entrackr [3] The Economic Times
