Financial irregularities, tough market: What went wrong at Mojocare?

In a joint statement, Mojocare's major investors alleged that they have 'uncovered financial irregularities" in the health and wellness start-up

Just days after Bengaluru-headquartered health and wellness start-up Mojocare announced laying off about 70 to 80 per cent of its workforce, major investors said they have found "financial irregularities" in it. In what looks like another case of corporate governance lapse, Moneycontrol reported that the start-up had inflated sales numbers and overstated revenue to meet its targets.

In a statement, the investors said, "Major investors of Mojocare initiated a review of the company's financial statements. While the analysis remains ongoing, initial findings have uncovered financial irregularities, and it has become apparent that the business model is not sustainable due to a variety of operational and market factors."

They added, "As a result, Mojocare will be scaling down operations, and the investor group is working with the company through its transition."

Mojocare's major investors include Chiratae Ventures, Peak XV Partners, B Capital, Better Capital, and Surge, among others. Media reports suggest Deloitte has been conducting the company's forensic audit for some time now. 

Mojocare has, however, denied all the accusations.

According to data from Tracxn, Mojocare's revenue had jumped from Rs 30 lakh in 2020-21 (FY21) to Rs 12.1 crore in FY22. But its losses also climbed from Rs 1.1 crore to Rs 5.5 crore during the same period.

With this, Mojocare has joined the list of Peak VX Partners-backed start-ups that are facing allegations of misconduct. It includes names like GoMechanic, Zilingo, BharatPe and Trell.

Last year, Peak XV Partners, earlier known as Sequoia India and Southeast Asia, said it would take proactive steps to drive compliance in its portfolio start-ups.

Since it was founded in 2020, Mojocare has raised about $23 million. Its founders, Rajat G and Ashwin S, hold about 48 per cent of the stake, while Chiratae Ventures has around 14 per cent ownership in the company. B Capital holds around 10 per cent, while other investors account for the remaining ownership in Mojocare.