Unveiling Deception: Sequoia’s Fund Split Exposes Ghosts in Mojocare’s Financial Sheets, leaving Indian startup industry mired in scandals. The pandemic’s receding tide reveals soaring metrics conjured from thin air, as disillusioned investors unearth the truth.
Mojocare, a health and wellness startup, announced the layoff of 150 to 170 employees across roles in order to improve its unit economics and capital efficiency.
In August 2022, the Bengaluru-based startup raised approximately $20 million in a series A round led by B Capital Group, a venture firm founded by Facebook co-founder Eduardo Saverin. The round was also attended by existing investors Chiratae Ventures, Sequoia India’s Surge, and Better Capital.
Earlier this month, Sequoia split its fund into several parts, and now the newly found Peak XV partners have found some ghosts buried deep in Mojocare’s financial sheets. When the tide receded after reaching a high point during the pandemic years, the Indian startup industry became engulfed in mud. The soaring metrics in excel sheets presented by their trusted founders were conjured from thin air, investors discovered.
The investors didn’t specifically say what prompted them to launch a probe into Mojocare. However, it is believed that there may have been concerns about the company’s financial practices or its ability to deliver on promised products or services. Additionally, the investors may have received information from other sources that raised red flags about Mojocare’s operations.
Indian news outlet Morning Context reported on Sunday that Mojocare had been inflating its revenue figures for some time, often engaging with and paying sketchy vendor partners who were related to the founders. In a statement, Mojocare said it categorically denied any accusations of money being taken out of the company.
However, the company acknowledged that it had made some mistakes in its accounting practices and was taking steps to rectify them. Mojocare also stated that it remained committed to delivering high-quality products and services to its customers while maintaining transparency and integrity in its operations.
Mojocare investors said they will be scaling down operations at the startup. This decision was made in light of the recent accounting mistakes and accusations. The investors expressed their hope that Mojocare will take the necessary steps to regain their trust and confidence in the company’s financial management. The decision to downsize is part of the company’s larger restructuring efforts aimed at streamlining operations and optimising costs. Mojocare is confident that these measures will enable it to achieve long-term sustainable growth and profitability. “In order to improve our unit economics in the face of difficult market conditions, we at Mojocare have had to make difficult decisions.” “Despite our best efforts, our business fundamentals have not worked out in recent months,” said a company spokesperson in a statement. Around 15% of the company’s workforce will be laid off as a result of the downsizing. Mojocare will provide support and resources to affected employees during this transition period.
According to the spokesperson, the startup will revert to operating as a small but strong team to determine the best path forward for profitability and sustainability.
The company operates a direct-to-consumer (D2C) business to assist consumers with issues such as reproductive health and fertility, hair care, and weight loss via its online platform, which provides products, doctor consultations, and customized treatment plans.
“Despite the appearance of a crowded space, most players provide a transactional experience, selling generic products on third-party marketplaces where they have no ownership over the user’s wellness journey.” “We are taking a very distribution-first approach to unlocking this latent market through credible clinical content, access to experts, and a digital engagement-led user journey,” said Mojocare founder and CEO Ashwin Swaminathan in a statement earlier this year.
HealthifyMe, Practo, Pristyn Care, Mfine, Breathe Well Being, and MediBuddy are among the other well-funded players in the B2C healthtech space that have laid off a large number of employees since the funding winter of 2022.
Words by Keshvi Kamdar
Photograph via Pinterest
