A consortium led by Lifelong Group has acquired 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 auction to acquire GoMechanic, whose investors scrambled to sell the company 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 pretenses.
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 car washing, found that many of its garages were fictitious, in addition to other problems, TechCrunch previously reported.
With no new funding in sight, GoMechanic scrambled to cut expenses and laid off 70% of its workforce. The seven-year-old startup had 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.