Startup funding due diligence to get stricter and longer: GoMechanic crisis

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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.

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Startup funding due diligence to get stricter and longer: GoMechanic crisis

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.

Disclaimer

We strive to uphold the highest ethical standards in all of our reporting and coverage. We StartupNews.fyi want to be transparent with our readers about any potential conflicts of interest that may arise in our work. It’s possible that some of the investors we feature may have connections to other businesses, including competitors or companies we write about. However, we want to assure our readers that this will not have any impact on the integrity or impartiality of our reporting. We are committed to delivering accurate, unbiased news and information to our audience, and we will continue to uphold our ethics and principles in all of our work. Thank you for your trust and support.

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