Mojocare stares at shutdown amid scrutiny over financial irregularities

Healthtech startup Mojocare is staring at shutdown as its investors do not see any meaningful sell-out option. While the board of the company is likely to meet and discuss the awaited forensic audit report later this month, ET reported that the company has been found to be exaggerating its revenue and expenses.

“Mojocare is still exploring to consolidate with a large player,” said one of Entrackr’s sources aware of the development. “If they fail to find a deal, the firm is going to return the remaining money to its investors.”

Mojocare is backed by the likes of Chiratae, B Capital, Sequoia India’s Surge and Better Capital. The Bengaluru-based company raised $24 million in total and was last valued at around $70-75 million.

After unraveling financial irregularities, the aforementioned investors ordered a forensic audit. The initial investigation convinced investors that Mojocare’s business model is not sustainable due to a variety of operational and market factors.

As a result, the company almost wounded up its operations and fired over 80% of its workforce. More than 200 employees were laid off in a clean-up exercise by the investors and company. Entrackr was the first to report the mass layoffs at the company last month.

The forensic audit, however, is set to give clean chit to Mojocare co-founders, Rajat Gupta and Ashwin Swaminathan. 

Entrackr has reached out to Mojocare and its investors for comments.

Mojocare has joined a league of several growth stage companies which have cooked up fake revenue-expense numbers and faced forensic audits. Chiratae and Sequoia-backed GoMechanic busted as it was found out to be inflating numbers by creating a fake network of workshops while Info Edge also chose to go for forensic audit against 4B Networks. BharatPe, Trell and Zilliogo were also caught in financial irregularities, fraud and founders’ personal gains.