Car-servicing startup GoMechanic has been acquired by Servizzy, a consortium led by the Lifelong Group. This comes months after GoMechanic laid off 70% of its workforce as the co-founder Amit Bhasin acknowledged lapses in financial reporting, creating much furor within the startup community.
“Due to the recent financial difficulties at GoMechanic, the board, and shareholders with support from Stride Ventures initiated a speedy and widely publicized sale process to ensure the continuity of business,” said a press release from the Lifelong Group.
“The Servizzy consortium, to be led by the Lifelong Group, emerged as the strongest bid in this process for the acquisition of the GoMechanic Business in accordance with terms and conditions contained in the agreement,” it added.
The Lifelong Group, incorporated in 1985, pivoted to auto component manufacturing in 1995. The company also deals in medical devices and ecommerce spaces. It claims its annual revenue has grown from $0.5 million in 1995 to $175 million now. Some of its top customers include Hero Moto Corp, General Motors, and Arvin Meritor among others.
The Lifelong Group expressed optimism that the deal will help in preserving the ecosystem at large, and offer a new lease of life for GoMechanic, which continued to operate 800 workshops and service 30,000 vehicles in January despite challenges.
That said, it’s indeed a new lease of life for GoMechanic which hit headlines in January for all the wrong reasons. As mentioned above, Bhasin admitted lapses in financial reporting, which were reportedly discovered during due diligence by EY. GoMechanic was in talks with SoftBank to raise fresh capital. The co-founder had then said third-party will now conduct an audit of the company’s business.
Founded in 2016, GoMechanic was backed by several marquee investors, including Sequoia Capital and Tiger Global. In June 2021, the company raised $42 million in a funding round led by Tiger Global.
In FY22, GoMechanic’s revenue rose 2.7x when compared to the previous fiscal year, managing to inch close to Rs 100 crore. Its operating income surged to Rs 91 crore in the last fiscal year as compared to Rs 34 crore in FY21. Outpacing its growth in scale, GoMechanic’s losses spiked 4X and stood at Rs 114 crore in FY22. According to Fintrackr, the biggest cost center for the firm was advertisement and promotion which surged 3.8X to Rs 65 crore.