Wellness platform Mojocare is planning on shutting down soon because investors don’t see any way to sell out and raise funds for the company’s operations, multiple news publications have reported. Entracker reported that the company is exploring consolidating with a large player, and if it fails to do so, it will return the remaining money back to its investors. The company is also undergoing a financial audit at the moment, and the audit’s preliminary findings have revealed financial irregularities.
We have reached out to Mojocare to confirm the information and the company’s future plans and will update the story based on their response.
What is Mojocare?
Mojocare was founded in 2021 by Rajat Gupta and Ashwin Swaminathan. The company offers products to help with sexual health issues, hair care, and weight management. It also provides consultations with doctors mental health specialists, and nutritionists. According to the startup data platform Tracxn, Mojocare has raised $23.7 million over three rounds of funding, its latest round of funding was in July 2022. Some of its major investors include B Capital Group, Surge Ventures, Chiratae Ventures, and Peak XV Partners (earlier Sequoia Capital). The company has a collective valuation of $67.1 million.
What led Mojocare down the path of a shutdown?
In June this year, multiple investors in Mojocare came together to initiate a forensic audit of the company. Investors told CNBC News-18, that the initial findings of the audit revealed financial irregularities and that the company’s business model was not successful. They said that the company would be scaling down operations, and, to that effect, it laid off 80% of its staff.
Inc42 reported that the founders of the company had approached investors in May and informed them about round-tripping of funds (a practice where money leaves the company through various channels only to eventually make its way back into the company) by selling inventory to relatives, creating fake invoices and inflating revenues.
Article continues below. You might also want to read: Sequoia To Split Into Three Venture Capital Firms: For India & Southeast Asia, China, And US & Europe
Misgovernance issues in the Indian Startup ecosystem
First good governance begins in the founders heads. No amount of oversight by investors, boards, audit committees or auditors can ensure a company is well governed if the founders are not committed to this objective
— Sanjeev Bikhchandani (@sbikh) April 17, 2022
Bikhchandani’s words ring true given that we are seeing similar governance problems emerge in multiple startups in India today. Bjyus, BharatPe, GoMechanic, and Trell all have allegedly been dealing with cases of fraud just like Mojocare.
What is worth noticing about the companies listed above is that Peak XV Partners is an investor in all of them. Peak XV wrote about corporate governance issues back in 2022 echoing the same sentiment as Bikhchandani saying that “Better corporate governance is a shared responsibility between founders, management, and the board. And to get there the ecosystem needs to come together and commit to some changes.”
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