Mojocare’s Board To Discuss Winding Down Business, Returning Money To Investors

With Deloitte submitting its final audit report, the board of the beleaguered healthtech startup Mojocare is likely to meet later this month. The board will reportedly discuss the matter of winding down the operations of the startup in the next meeting planned on July 12.

As per the final forensic report, the founders have been found to have inflated revenues and sales in internal presentations to investors, ET reported. In addition, the founders also showed elevated expenses as well to explain the losses in spite of the higher revenues.

“However, no siphoning of money by founders for personal gains has been established in the final report,” one of the sources said as quoted in the ET report.

Besides the idea of winding down the business, and returning the remaining capital to investors, some of the investors also explored a fire sale strategy like it was done with another startup GoMechanic. However, most of the investors have backed the idea of closing the operations.

They (the founders) were giving a false picture to the investors by tweaking the revenue and expense numbers — till the internal audit asked for explanation.

Last month, an investor group of the troubled startup said an analysis of the startup’s financial statements revealed irregularities. As said in the statement last month, Mojocare’s investors, including VC firms and angel investors, were looking to wind down company operations.

Mojocare was founded in 2020 by Ashwin Swaminathan and Rajat Gupta. The healthtech startup has raised around $24 Mn since its founding.

Some of the biggest investors of the Bengaluru-based Mojocare include Facebook cofounder Eduardo Saverin’s B Capital, Chiratae Ventures and Peak XV’s Surge (formerly Sequoia Capital India’s Surge).

A source close to Mojocare told Inc42 earlier that the founders confessed to fudging the numbers in May 2023. The source said the healthtech startup’s founders round-tipped funds via inventory sold to relatives, created fake invoices and inflated revenue.

After a month of the confession, the healthtech startup fired 80% of its workforce, impacting around 150-170 employees.

A number of Indian startups have put their investors in a tight spot lately amid financial irregularities such as GoMechanic, Zilingo, Trell, Rahul Yadav’s 4B. In the case of GoMechanic, the founders publicly admitted to ‘errors in judgment’ in financial reporting. The startup ultimately sold to a consortium led by Lifelong Group, which is a majority shareholder in GoMechanic rival Servizzy.