Distressed Indian startup GoMechanic acquired by Lifelong Group-led consortium
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.
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,” Lifelong Group said in a statement.
The move 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.
High-profile backers including Tiger Global, SoftBank and Malaysia’s Khazanah evaluated an investment in GoMechanic last year but passed for various reasons. A probe into the startup, 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.