Entrepreneurship

Orios signs GoMechanic investment

NEW DELHI : Venture capital firm Orios Venture Partners, which owns about 17.1% of troubled car service startup GoMechanic, said in an internal email to its limited partners (LPs) that it has written down its investment in the startup, a copy of which it reviewed On the.

“While our exposure from Fund II was 7.79% of committed corpus, in the last valuation round, the assets represented about 1.27k multiple of the fund’s value of invested capital (MOIC). We are recording this value,” it said in a note. Orios Venture Partners has raised a total commitment of $75 million for its second fund, its past filings show.

GoMechanic was last valued at $285 million after raising $42 million, according to VCCedge data. The Gurugram-based firm was looking to raise a fresh round of funding led by SoftBank and Khazanah Nasional and had a valuation of over $800 million.

Orios alleged in his letter that GoMechanic inflated sales and cut costs in order to secure a higher valuation for his company. “It is shocking to us that two boys who came from humble families and studied at IIM Ahmedabad resorted to such measures when their business was already worth $100 million,” the message said.

The mail also states that other investors in GoMechanic have commissioned a forensic audit to investigate allegations of financial fraud and misreporting.

“Surprisingly, KPMG and PVC, the company’s previous auditors, also found no problems in their reports,” the post said.

Email inquiries to GoMechanic, Orios Venture Partners, KPMG and PvC spokespeople did not elicit a response.

Trackn data shows that Sequoia Capital owns the largest stake in GoMechanic with 26.89%, followed by Orios Venture Partners with 17.1%, Tiger Global with 10.03% and other investors with a combined stake of 11.2% . The company’s founders, Amit Bhasin, Kushal Karva, Nitin Rana and Rishabh Karva, together own 25.5% of the company.

GoMechanic admitted in a Linkedin post by co-founder Amit Bhasin on Wednesday that it falsified numbers to investors after SoftBank discovered irregularities in the five-year-old firm’s growth and revenue while checking accounts ahead of a potential investment.

The company also announced the layoff of 70% of its staff, which numbers between 1,100 and 1,200.

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