The co-founder of Sequoia-backed car workshop and auto spare parts platform, GoMechanic announced on Wednesday through a LinkedIn post that the company is going to let go approximately 70 per cent of its workforce.
Bhasin said in the post, "We take full responsibility for this current situation and unanimously have decided to restructure the business while we look for capital solutions."
He also added, "Our passion to survive the intrinsic challenges of this sector, and manage capital, took the better of us, and we made errors in judgement as we followed growth at all costs, including in regard to financial reporting, which we deeply regret."
Accounting irregularities
The company offers everything from mechanics to car washing services through an app, but is now facing a cash crunch as its funding round is in jeopardy. GoMechanics was earlier in talks to raise a $75-80 million funding round led by SoftBank, but due to irregularities in accounting, the deal was called off. According to a report by Bloomberg, research by EY's suggests that over 60 of the company's 1,000 service centres may have violated accounting standards to divert funds and overstate revenue.
This is the fourth startup that is backed by Sequoia, which has come under fire for irregularities in accounting. In the last year, companies like BharatPe, Zilingo, and Trell were also accused of accounting irregularities.
GoMechanic
GoMechanic was founded by four friends Kushal Karwa, Amit Bhasin, Rishabh Karwa, and Nitin Rana in 2016 and grew fast to serve over 7 lakh customers so far. The company currently runs over 900 garages in over 40 cities.
