Investors of Mojocare have uncovered financial irregularities at the Indian health and wellness startup, leading them to announce plans to downsize its operations. The Bengaluru-based company, which received backing from Peak XV, B Capital, and Chiratae Ventures, recently laid off the majority of its workforce consisting of around 150 employees. The investors released a joint statement indicating that their review of Mojocare's financials revealed an unsustainable business model due to various operational and market factors.
Although the investors did not explicitly state the reason behind their investigation into Mojocare, a report by Indian news outlet Morning Context alleged that the startup had been inflating its revenue figures by collaborating with dubious vendor partners connected to the founders. Mojocare responded with a statement denying all accusations of financial impropriety.
As a result of the findings, the investors are planning to scale down operations at Mojocare. The startup, founded three years ago and having raised approximately $23 million in funding, acknowledged earlier in the week that its business fundamentals had not performed well in recent months. Citing challenging market conditions, a company spokesperson explained that tough decisions were necessary to improve the startup's unit economics.
Mojocare's situation adds to a growing list of Sequoia-backed startups in Asia that have faced allegations of misconduct. GoMechanic, Zilingo, BharatPe, and Trell are among the companies that have encountered governance and auditing issues in the past year and a half.
Peak XV Partners, formerly known as Sequoia India and Southeast Asia, made a commitment last year to take proactive measures to enhance compliance among its portfolio startups. As the most prolific startup supporter in the region, the firm announced plans to implement governance training for founders and senior management, introduce whistleblower policies, encourage more independent board representation, and demand increased disclosure, internal audits, and controls.