Car-servicing startup GoMechanic has raised money after nearly 30 months. And it seems like a rebuild from almost scratch, as the Gurugram-based company has roped in two dozen investors to raise $6 million as it tries to get back on its feet after a horrible 2022-23.
The board at GoMechanic has passed a special resolution to allot 46,952 Series C Compulsorily Convertible Preference Shares (CCPS) at an issue price of Rs 7,826 per share to raise 36.74 crore or $4.3 million, the company’s regulatory filings with the Registrar of Companies (RoC) show.
Sunil Kant Munjal, Partner on Behalf of Hero Enterprise Partner Ventures led the round with Rs 10 crore while Gensol Engineering Limited and Emerge Capital Opportunities poured in Rs 6 crore and Rs 5 crore respectively. Gensol Engineering is headed by Anmol Jaggi, founder and CEO of mobility startup BluSmart.
The round saw participation by 21 other angels and ventures including Lifelong and Stride Ventures who collectively invested Rs 15.74 crore during the round.
According to TheKredible estimates, the company has been valued at around Rs 157 crore or $18.5 million, post-allotment. The firm will be valued at around $20 million after receiving the entire $6 million. At its peak, GoMechanic was valued at around $325 million when Tiger Global led a $42 million round in November 2021.
Things started falling out for the firm late last year when investors found serious irregularities in its financial reporting. In January 2023, GoMechanic laid off 70% of its workforce as one of its co-founders and chief executive Amit Bhasin publicly acknowledged lapses in financial reporting. The lapses were reportedly discovered during due diligence by EY on behalf of the company’s board.
Following the acquisition by Servizzy, all three co-founders of GoMechanic left the firm. Currently, Himanshu Arora and Muskan Kakkar are leading the company as chief executive and chief operating officer, respectively.
As per GoMechanic, it has undergone a strategic shift focused on transparency, cost-effectiveness, and efficiency since the acquisition by Servizzy. It also expanded its business lines to include ‘GoMechanic Service Business,’ ‘GoMechanic Spares,’ and ‘GoMechanic Accessories.’ It recently claimed that this approach has resulted in a fourfold increase in revenue, with positive projections for doubling revenues in the spares and accessories vertical by the end of the fiscal year.
There is no doubt that the auto servicing market is massive, with significant potential for firms to grab a share of the pie. Consumer satisfaction with existing networks has never really been very high, and it has only gotten worse (and more expensive) over the years. Firms have regularly faced regulatory ire for gouging customers by restricting access to OEM supplies or exorbitant charges. That was the opportunity GoMechanic went for before it all went awry. One could ponder over the wisdom of retaining the brand name, but considering the fact that the key issue was inflating sales and customers, perhaps the brand has not actually lost its sheen, or at least that’s what its new, experienced investors seem to feel.
With no visible outreach to old customers, it should be very interesting to see how the firm scales up, unless it has captive business from its new stakeholders. A second chance comes rarely for most firms after blowing up as badly as GoMechanic did, and we wouldn’t rush to judge this second try a success for GoMechanic anytime soon.