B Capital Backed Healthtech Startup Mojocare In Hot Soup: VCs Flag Financial Irregularities

After the reported layoffs at healthcare startup Mojocare, which saw at least 170 employees fired abruptly, the startup’s investors, including B Capital, Chiratae Ventures and Peak XV Partners’ Surge, have issued a statement mentioning that they have ‘initiated a review’ of the healthtech startup’s financial statements.

“Major investors of Mojocare initiated a review of the company’s financial statements,” said a group of Mojocare investors. The investors added that while the analysis remains ongoing, initial findings have uncovered financial irregularities.

According to the investors, the analysis revealed that the business model is unsustainable due to ‘operational and market factors’. “As a result, Mojocare will be scaling down operations, and the investor group is working with the company through its transition,” Mojocare’s investors added in a joint statement.

The investors’ statements come a day after reports of the healthcare startup firing 80% of its workforce, impacting over 170-180 employees hit the media. According to Entrackr, the number could be as high as 200.

According to the company’s financials accessed by Inc42, Mojocare earned INR 12.12 Cr in total revenue in FY22, compared to INR 32 Lakh in FY21. However, Mojocare’s total expenses spiralled from INR 1.83 Cr in FY21 to INR 19.46 Cr in FY22.

Overall, the healthtech startup posted a loss of INR 5.53 Cr in FY22, compared to a loss of INR 1.12 Cr in FY21.

A TMC report, citing company employees, alleged that Mojocare’s founders inflated revenue figures and funnelled funds to vendors who were reportedly relatives of the founders. Additionally, the report claimed that Mojocare misrepresented actual revenue figures, prompting investors, led by Chiratae Ventures, to demand complete transaction details, profit and loss statements, and cash flow statements.

Mojocare had reportedly failed to provide the details requested, which led to investors sending in auditors from Deloitte. The auditors are said to have confiscated the laptops from key personnel, which revealed the scale of the financial irregularities at the startup.

After the initial report, all company funds were frozen by the investors, who also took away all executive powers from the founders.

Mojocare has raised $24 Mn in funding to date, with its last round worth $20.6 Mn in August 2022, led by B Capital, with participation from Chiratae Ventures, Better Capital and Peak XV Partners’ Surge.

It is also backed by CRED’s Kunal Shah, Snapdeal’s Rohit Bansal and, interestingly enough, GoMechanic’s cofounder Amit Bhasin.

Founded in 2020 by Gupta and Ashwin Swaminathan, Mojocare is a digital wellness platform, offering personalised care delivery systems for sexual wellness, women’s wellness, mental wellness and hair loss.

Mojocare joins the list of Indian startups which have put their investors in a tight spot amid financial irregularities. In the past year, startups such as GoMechanic, Zilingo, Trell and others, made headlines for all the wrong reasons. 

GoMechanic, in particular, was a highly controversial case as the founders publicly admitted to ‘errors in judgment’ in financial reporting, which saw around 500 employees fired and the startup sold to a consortium led by Lifelong Group, which is a majority shareholder in GoMechanic rival Servizzy.