GoMechanic controversy deepens: Investors approach EOW over founders’ financial misreporting

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Investors Approach Economic Offences Wing Amid GoMechanic Controversy

In a significant turn of events, investors of GoMechanic have taken their concerns to the Economic Offences Wing (EOW) to investigate the role of the company’s four cofounders in allegedly misreporting financial data and any potential misappropriation of funds.

Controversy Surrounding GoMechanic Financial Reporting

In January 2023, the controversy came to light when the founders of GoMechanic, an auto services startup, admitted to providing false revenue figures, thereby misleading their investors.

GoMechanic Investors’ Pursuit of Legal Action

Rehan Yar Khan, General Partner at Orios Venture Partners, confirmed that a complaint with the EOW has been filed by Orios, Sequoia (Peak XV), Tiger Global, and Chiratae. These investor parties view themselves as aggrieved parties due to their investment in GoMechanic and are actively seeking legal recourse.

Focus on Revenue Inflation and Misappropriation of Funds

Sources close to the investor group indicate that the EOW’s involvement aims to delve into how the alleged revenue inflation by GoMechanic’s founders could have potentially led to the misappropriation of funds.

GoMechanic Attempt to Address the Issue

In a LinkedIn post in January, cofounder Amit Bhasin publicly acknowledged committing “errors in judgement” related to financial reporting as the startup pursued growth. Bhasin expressed regret over the errors that stemmed from an eagerness to overcome challenges in the sector and manage capital.

Founders’ Admissions and Background

Founded in 2016 by Amit Bhasin, Kushal Karwa, Rishabh Karwa, and Nitin Rana, the startup’s other founders were also said to have admitted to misreporting revenue figures, as per undisclosed sources.

Amidst Broader Corporate Governance Issues

GoMechanic’s case came to light amid a backdrop of corporate governance concerns in the Indian startup ecosystem. Investors, including the Small Industries Development Bank of India (SIDBI), questioned funds about due diligence lapses and irregularities at various startups.

Impact on Funding and Future

The controversy led to GoMechanic’s acquisition by a consortium led by Lifelong Group two months later. The deal reportedly involved equity investors writing off their investments, while venture debt investors partially recovered their funds.

Enhanced Due Diligence Going Forward

Orios Venture Partners has heightened its due diligence procedures following the GoMechanic incident. The firm now implements an “evidence-based diligence” approach, including verifying financial claims through online bank account statements during video conference calls.

Founders’ New Ventures

Rishabh Karwa and Nitin Rana, two of GoMechanic’s cofounders, are currently pursuing separate startup ventures just six months after the controversy. Nitin Rana is focusing on building a travel and hospitality product, while Rishabh Karwa aims to develop a location-based product for retail storefronts.

EOW’s Ongoing Investigations

The EOW has been actively investigating allegations of corporate governance lapses in various startups in recent months, including cases involving companies such as BharatPe and Broker Network.

As the situation unfolds, we will see how the potential EOW investigation into GoMechanic will impact related businesses, like the recently acquired Servizzy or the new ventures initiated by GoMechanic’s 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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GoMechanic controversy deepens: Investors approach EOW over founders’ financial misreporting

Investors Approach Economic Offences Wing Amid GoMechanic Controversy

In a significant turn of events, investors of GoMechanic have taken their concerns to the Economic Offences Wing (EOW) to investigate the role of the company’s four cofounders in allegedly misreporting financial data and any potential misappropriation of funds.

Controversy Surrounding GoMechanic Financial Reporting

In January 2023, the controversy came to light when the founders of GoMechanic, an auto services startup, admitted to providing false revenue figures, thereby misleading their investors.

GoMechanic Investors’ Pursuit of Legal Action

Rehan Yar Khan, General Partner at Orios Venture Partners, confirmed that a complaint with the EOW has been filed by Orios, Sequoia (Peak XV), Tiger Global, and Chiratae. These investor parties view themselves as aggrieved parties due to their investment in GoMechanic and are actively seeking legal recourse.

Focus on Revenue Inflation and Misappropriation of Funds

Sources close to the investor group indicate that the EOW’s involvement aims to delve into how the alleged revenue inflation by GoMechanic’s founders could have potentially led to the misappropriation of funds.

GoMechanic Attempt to Address the Issue

In a LinkedIn post in January, cofounder Amit Bhasin publicly acknowledged committing “errors in judgement” related to financial reporting as the startup pursued growth. Bhasin expressed regret over the errors that stemmed from an eagerness to overcome challenges in the sector and manage capital.

Founders’ Admissions and Background

Founded in 2016 by Amit Bhasin, Kushal Karwa, Rishabh Karwa, and Nitin Rana, the startup’s other founders were also said to have admitted to misreporting revenue figures, as per undisclosed sources.

Amidst Broader Corporate Governance Issues

GoMechanic’s case came to light amid a backdrop of corporate governance concerns in the Indian startup ecosystem. Investors, including the Small Industries Development Bank of India (SIDBI), questioned funds about due diligence lapses and irregularities at various startups.

Impact on Funding and Future

The controversy led to GoMechanic’s acquisition by a consortium led by Lifelong Group two months later. The deal reportedly involved equity investors writing off their investments, while venture debt investors partially recovered their funds.

Enhanced Due Diligence Going Forward

Orios Venture Partners has heightened its due diligence procedures following the GoMechanic incident. The firm now implements an “evidence-based diligence” approach, including verifying financial claims through online bank account statements during video conference calls.

Founders’ New Ventures

Rishabh Karwa and Nitin Rana, two of GoMechanic’s cofounders, are currently pursuing separate startup ventures just six months after the controversy. Nitin Rana is focusing on building a travel and hospitality product, while Rishabh Karwa aims to develop a location-based product for retail storefronts.

EOW’s Ongoing Investigations

The EOW has been actively investigating allegations of corporate governance lapses in various startups in recent months, including cases involving companies such as BharatPe and Broker Network.

As the situation unfolds, we will see how the potential EOW investigation into GoMechanic will impact related businesses, like the recently acquired Servizzy or the new ventures initiated by GoMechanic’s 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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