A consortium led by Lifelong Group has acquired ailing company GoMechanic months after the Sequoia India-backed startup admitted “serious errors” in its financial reporting.
New Delhi-based Lifelong Group, which serves several major auto industry players including Hero and General Motors, said it won the bid to acquire GoMechanic, whose investors were seeking a sale earlier this year.
“This transaction will help preserve the ecosystem at large and will also enable the livelihoods of GoMechanic’s employees,” Lifelong Group, now a majority investor in GoMechanic, said in a statement.
The acquisition closes an embarrassing episode in the Indian startup community after GoMechanic’s founders were found to have misrepresented facts, inflated revenue figures, left investors in the dark and tried to raise new funding under false pretenses.
Reputable lenders, including Tiger Global, an existing investor in GoMechanic, SoftBank and Malaysia’s Khazanah, evaluated a new investment in GoMechanic last year, but decided against it for various reasons. An investigation commissioned by existing backers from GoMechanic, which offers auto services such as repairs and car washes, concluded that many of its garages were fictitious, among other things, australiabusinessblog.com previously reported.
With no new funding in sight, GoMechanic scrambled to cut costs and eliminate 70% of its workforce. The seven-year-old startup raised more than $60 million over the years and was looking to raise its valuation to $1.2 billion last year.