GoMechanic Sacks 70% Staff, Investor Sequoia Launches Forensic Audit

Nearly two years after it raised a mammoth $42 Mn funding, automobile after-sales service startup GoMechanic has reportedly laid off around 70% of its workforce. 

Besides the retrenchments, former employees told The Morning Context that the startup has also directed the remaining employees to work without pay for the next three months. 

Inc42’s email query to GoMechanic elicited no response till the time of publishing this story. The article will be updated on receiving a response from the startup. 

Employees across departments including on-ground staff members were impacted by the layoffs. However, the startup also told the laid off employees that they would  be ‘called again if things get back to normal’.

Meanwhile, GoMechanic’s biggest investor Sequoia Capital has also launched a forensic audit at the Gurugram-based startup. Citing financial irregularities, a source told the publication that GoMechanic has total loans of INR 120 Cr and ‘market pendency’ of INR 40 Cr which is ‘pressuring’ the startup currently. 

A person familiar with the development added that it is critical for the Gurugram-based company to raise funds in the ‘next few months’ as the startup does not have any runway beyond that. 

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 startup is backed by marquee investors such as Sequoia Capital, Tiger Global, Orios Venture Partners and Chiratae Ventures. It raised $42 Mn in Series C funding from Tiger Global, Sequoia Capital India, and others in June 2021. 

This is not the first time that Sequoia India’s portfolio companies have been mired in controversies. On previous occasions, Sequoia has also undertaken forensic audits at multiple portfolio startups including big names such as BharatPe, Trell and Zilingo.

With the layoffs, GoMechanic has joined a growing list of Indian startups that have borne the brunt of the funding winter and adverse macroeconomic conditions that have gripped the Indian startup ecosystem

In the past one week itself, multiple homegrown startups such as foodtech unicorn Rebel Foods, ride-hailing platform Ola, social media platform Sharechat’s parent company Mohalla Tech, and Reliance-backed quick commerce startup Dunzo have sacked employees. 

Enterprisetech startup Skit.ai also laid off around 115 employees, while fintech platform Cashfree Payments fired 80 employees recently. 

In total, Indian startups sacked more than 18,000 employees in 2022, as per Inc42’s layoff tracker.