Investors allege financial irregularities at Sequoia-backed Mojocare

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The company, however, in a statement to BQ Prime, denied all accusations of withdrawing money from the company.

“Mojocare’s principal investors have launched a review of the company’s financial statements,” a spokesperson said on behalf of a consortium of investors on Sunday. “While analysis is ongoing, initial results have revealed financial irregularities and it has become apparent that the business model is not sustainable due to various operational and market factors.”

“As a result, Mojocare will scale back its operations and the investor group is working with the company through its transition,” the spokesperson said in a statement.

Mojocare’s troubles are reminiscent of GoMechanic’s forensic audit backed by Sequoia Capital and the fire sale to Lifelong Group after financial fraud was uncovered in the auto service startup. The crackdown on weak corporate and financial governance has intensified as investors focus on profitability.

“At Mojocare, we are working closely with our investors to find a way forward… Together with our investors, we are actively seeking what is best for the business,” the company said in a statement.

Bengaluru-based Mojocare, backed by Peak XV Capital (formerly Sequoia Capital India and Southeast Asia), B Capital and Chiratae Ventures, has raised around $23m to date.

Investor scrutiny over alleged financial irregularities comes just two days after the company laid off between 150 and 170 employees.

“Faced with challenging market conditions, at Mojocare we had to make tough decisions to improve our unit economics. Despite our best efforts, the fundamentals of our business have not worked over the past few months,” said a Mojocare spokesperson.

“In order to become more capital efficient, we decided to rationalize costs,” he said. “In order to prioritize profitability and sustainability, we need to come back to a small but strong team, which allows us to determine what is best for the business going forward.”

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