GoMechanic Lays Off 70% Workforce, Admits To 'Grave Errors' In Financial Reporting

GoMechanic's pain underscores a highly uncertain environment for startups over the last 8-10 months.

<div class="paragraphs"><p>A&nbsp;GoMechanic workshop. (Source: Company website)</p></div>
A GoMechanic workshop. (Source: Company website)

Car servicer aggregator GoMechanic has laid off about 70% of its workforce as the company restructures business after admitting "grave errors" in financial reporting.

"Our passion to survive the intrinsic challenges of this sector and manage capital took the better of us, and we made grave errors in judgment as we followed growth at all costs, particularly in regard to financial reporting, which we deeply regret," Co-Founder Amit Bhasin confirmed in a LinkedIn post on Wednesday morning.

"As entrepreneurs, we identify problems, come up with solutions, and explore every opportunity to grow those solutions to meet unmet needs. But, in this instance, we got carried away," he said.

Bhasin said they "take full responsibility for this current situation and unanimously have decided to restructure the business while we look for capital solutions."

Bhasin also confirmed that "a third-party firm will be conducting an audit of the business." "While the situation is far from anything we could have ever imagined for GoMechanic, we are working on a plan that would be most viable under the circumstances."

In a joint statement to BQ Prime, major investors at GoMechanic said they were "recently made aware by the company’s founders of the serious inaccuracies in the company’s financial reporting."

"We are deeply distressed by the fact that the founders knowingly misstated facts, including but not limited to the inflation of revenue, which the founders have acknowledged. All of this was kept from the investors. The investors have jointly appointed a third-party firm to investigate the matter in detail, and we will be working together to determine next steps for the company," the statement read.

In June 2021, the Sequoia-backed startup had raised $42 million—around Rs 311 crore—led by Tiger Global. In August 2022, it had been in talks with investor Khazanah Nasional for a $100 million round as well, according to Bloomberg. Its other investors include Orios Venture Partners, Chiratae Ventures, and the Pawan Munjal family office.

The Morning Context reported the layoffs yesterday.

GoMechanic's pain underscores a highly uncertain environment for startups over the last 8–10 months, where valuations have dropped, employees have been laid off, and funding has been muted across sectors amid worries about the economy as a whole.

Recently, multi-billion dollar firms such as Byju's, Ola, Vedantu, and Unacademy have laid off hundreds, while global tech giants such as Amazon, Twitter, and Meta have also resorted to the same.