Due diligence standards will become stricter, and deal closure timelines, even at the early stages, will become longer, as venture capital (VC) firms become increasingly wary in the aftermath of GoMechanic’s due diligence crisis.
On January 19, GoMechanic co-founder Amit Bhasin admitted to misreporting financial figures on LinkedIn, saying they “got carried away” chasing growth at any cost and “made grave errors” in judgement. This was yet another setback for the VC ecosystem, which was already dealing with a funding freeze, tech stock crashes, and other macroeconomic issues. As VCs rethink their strategies, capital will become more expensive to raise in the future, even for the best of founders, as due diligence and deal closure timelines are extended, according to multiple investors and founders.