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Orios Writes Down Investment In GoMechanic: Report

Orios Venture Partners first invested in GoMechanic during the latter’s Series A round worth $4.9 million in January 2019

Orios Writes Down Investment In GoMechanic: Report
POSTED ON January 20, 2023 1:40 PM

Venture capital firm Orios Venture Partners has written down its investment in the owned car servicing start-up, GoMechanic, in an internal mail to its limited partners (LP), Mint reported.

The venture capital (VC) firm owns about a 17.14 per cent stake in the start-up, the second-largest institutional stakeholder.

“While our exposure from Fund II was 7.79 per cent of the committed corpus, at the last round’s valuation, the assets represented around 1.27x of the fund’s multiple on invested capital (MOIC). We are writing down this value,” the report stated.

In January 2019, Orios Venture Partners first invested in GoMechanic during the latter’s Series A round worth $4.9 million. Later, in the start-up’s $42 million Series B funding round led by Tiger Global, the venture capital raised its stake to 17.14 per cent.

In the internal note where Orios has written down its investment, it reportedly added that GoMechanic had been inflating sales and underreporting costs incurred to secure a higher valuation.

The development has come just a couple of days after GoMechanic co-founder Amit Bhasin publicly admitted to committing “errors in judgment” in financial reporting while trying to pursue growth in a chain of events, the start-up announced the layoff of around 70 per cent of its staff with a third party firm conducting an audit of the business.

"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," said Amit Bhasin in a LinkedIn post.

Sequoia has already launched a forensic audit in the start-up’s books to control the fallout. Previously, Klynveld Peat Marwick Goerdeler (KPMG) and Price Waterhouse (PwC) had conducted audits on the start-up but did not report any discrepancies.

However, while completing the audit jointly commissioned by SoftBank and Khazanah Nasional, Ernst and Young (EY) found out that 60 of over 1,000 GoMechanic service centres might have overstated revenue and diverted funds. 

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. 

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