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GoMechanic Lays Off 70% Of Its Workforce, a Third Party Firm To Audit The Business

Employees across departments, especially on-ground staff members were said to be impacted by the layoffs

GoMechanic Lays Off 70% Of Its Workforce, a Third Party Firm To Audit The Business
POSTED ON January 18, 2023 1:12 PM

Automobile service start-up GoMechanic has laid off around 70 per cent of its workforce,  Amit Bhasin, co-founder GoMechanic announced in a LinkedIn post.

The move comes as the Gurgaon-based start-up has been struggling to raise funds for over a year amid concerns about errors in financial reporting. 

Early last year, the start-up was reportedly in talks to raise a round of funding led by Tiger Global at over $1 billion valuation. However, the talks did not materialise into a deal after some discrepancy was found during the due diligence process, a report stated.

"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," said co-founder Amit Bhasin in a LinkedIn post.

"Our passion to survive the intrinsic challenges of this sector, and manage capital, took the better of us and we made errors in judgment as we followed growth at all costs, including in regard to financial reporting, which we deeply regret," he added.

Besides the retrenchments, it is said that the start-up has also directed the remaining employees to work without pay for the next three months. 

A third-party firm will also be conducting an audit of the Gurugram-based startup.

"We take full responsibility for this current situation and unanimously have decided to restructure the business while we look for capital solutions. This restructuring is going to be painful and we will, unfortunately, need to let go of approximately 70 per cent of the workforce. In addition, a third-party firm will be conducting an audit of the business," the post affirmed.

The development has come about two years after it raised $42 million (around Rs 311 crore) in a funding round led by Tiger Global Management.

Founded in 2016 by Amit Bhasin, Kushal Karwa, Nitin Rana and Rishabh Karwa, GoMechanic is an automobile repair startup that connects car owners with repair service providers in their area. It also sells original spare parts and accessories for automobiles on its website. 

The start-up is backed by investors such as Sequoia Capital, Tiger Global, Orios Venture Partners and Chiratae Ventures.

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