GoMechanic admits to irregularities, investors seek audit

Investors of GoMechanic have ordered a forensic audit of the accounts of the car servicing startup by EY to examine claims of fraud and financial misreporting, three people with knowledge of the development said.

- Anuj Suvama & Sneha Shah

The founders of GoMechanic admitted to falsifying figures to investors after SoftBank found irregularities in the five-year-old firm's growth and revenue numbers while inspecting accounts before a potential investment. The firm also announced the dismissal of 70% of its staff, numbering between 1,100 and 1,200 in a post on LinkedIn on Wednesday.

"The investors of GoMechanic were recently made aware by the company's founders of the serious inaccuracies in the company's financial reporting. We are deeply distressed by the fact that the founders knowingly misstated facts, including but not limited to the inflation of revenue, which the founders have acknowledged. All of this was kept from investors. The investors have jointly appointed a third-party firm to investigate the matter in detail, and we will be working together to determine the next steps," major investors of the company said in a joint statement.

GoMechanic is backed by investors such as Sequoia Capital, Tiger Global Management, Orios Venture Partners, Brand Capital, Chiratae Ventures, and Elina Investments.

"EY is working on the forensic audit, and once the enquiry is complete, we will have a complete picture of the nature and magnitude of the misrepresentation," said an investor of GoMechanic, one of the three people cited above, on condition of anonymity.