A consortium led by Lifelong Group has acquired the distressed firm GoMechanic months after the Sequoia India-backed startup admitted “grave errors” in financial reporting.
The New Delhi-headquartered Lifelong Group, which serves several major players in the automotive industry including Hero and General Motors, said it won the bidding to acquire GoMechanic, whose investors scrambled for a sale earlier this year.
“This transaction will assist in preserving the ecosystem at large and also enable providing continued livelihood to the employees at GoMechanic,” said Lifelong Group, now a majority investor in GoMechanic, in a statement.
The acquisition caps an embarrassing episode in the Indian startup community after it became apparent that GoMechanic founders had misstated facts, inflated revenue figures, kept investors in the dark and attempted to raise new funding under false pretences.
GoMechanic operates 800 workshops and serviced 30,000 vehicles in January, Lifelong Group said.
High-profile backers including Tiger Global, an existing investor in GoMechanic, SoftBank and Malaysia’s Khazanah evaluated fresh investment in GoMechanic last year but decided against it for various reasons. A probe ordered by existing backers into GoMechanic, which offers auto-services such as repairing and carwashing, concluded that among other things many of its garages were fictitious, TechCrunch previously reported.
With no new funding in sight, GoMechanic scrambled to cut expenses and eliminated 70% of its workforce. The seven-year-old startup raised more than $60 million over the years and was looking to increase its valuation to $1.2 billion last year. The startup’s valuation was slashed to $30 million in recent weeks.