SUMMARY
CarTrade has reportedly valued GoMechanic at a little over $30 Mn, a steep decline from its post-money valuation of $285 Mn in June 2021
Besides CarTrade, another investor firm is also involved in the deal
The development comes almost two months after GoMechanic cofounder Amit Bhasin publicly admitted that the startup was involved in financial misreporting
Almost two months after Sequoia-backed GoMechanic’s cofounder Amit Bhasin publicly admitted to financial misreporting, the after-sales service startup has reportedly found a buyer in auto marketplace CarTrade.
CarTrade has valued GoMechanic at a little over $30 Mn, according to a report by The Morning Context. This is a steep decline from the post-money valuation of $285 Mn it achieved in June 2021 when GoMechanic raised $42 Mn in a funding round led by Tiger Global.
Besides CarTrade, another investment firm is also involved in the deal, the report said citing a source. During discussion with potential buyers, Bhasin said the startup was looking to sell itself for INR 250 Cr, and it found a buyer willing to cover INR 200 Cr. After this, the startup was looking for another buyer who could get the remaining INR 50 Cr.
Bhasin as well as another cofounder Kushal Karwa will be selling their stakes, the report said. However, the amount of stake which CarTrade and the co-investor will own couldn’t be ascertained.
The troubled startup began exploring a sale after Bhasin admitted to committing ‘errors in judgment’ in regard to financial reporting while trying to pursue growth. It reportedly held talks with multiple companies, including Cars24 and Spinny, for a takeover.
Founded in 2016 by Amit Bhasin, Kushal Karwa, Nitin Rana and Rishabh Karwa, GoMechanic connects car owners with repair service providers in their area. Besides, it sells original spare parts and accessories for automobiles on its website.
Bhasin’s LinkedIn post came a day after it was reported in January that GoMechanic laid off around 70% of its workforce.
Following the public admission of fault, GoMechanic’s second largest institutional shareholder, Orios Venture Partners, wrote down its investment in the car servicing startup. Its another investor Sequoia also launched a forensic audit against the startup.
The acquisition of GoMechanic will allow CarTrade, which helps customers buy or sell new and used vehicles, make an entry into the after-sales service segment.
The multi-channel auto marketplace, which is listed on the stock exchanges, launched a new venture last month to scale investments and acquisitions in the Indian automotive space. It said it would invest INR 750 Cr over the next 5-7 years to strengthen its play in the auto-tech industry.
CarTrade reported a consolidated profit after tax of INR 14.04 Cr in the quarter ended December 2022, while its total income stood at INR 115.85 Cr during the quarter.
