Amid growing demand for stronger corporate governance in India’s privaetly-funded startups, health-tech startup Mojocare, backed by Peak XV (formely Sequoia India) and others, is downsizing operations. Its investors, have jointly issued a statement, stating that they have uncovered ‘financial irregularities’ in the company and have hence taken this move.
The move follows Mojocare’s recent decision to lay off a significant portion of its workforce – about 170 employees, or about 80% of its workforce – adding further concerns about the company’s sustainability. According to a report by the Economic Times, Mojocare justified the layoffs by claiming that it was needed to improve capital efficiency and unit economics.
“Despite our best efforts, our business fundamentals have not worked out over the past few months. In order to become more capital efficient, we have decided to rationalise costs. In order to prioritise profitability and sustainability, we must revert to operating as a small yet robust team, allowing us to figure out what’s best for the company going forward,” Mojocare had then said in a statement.
The investors of the Bengaluru-based healthcare startup include the likes of Peak XV Partners, B Capital and Chiratae Ventures, and have flagged several “financial irregularities” at the startup, according to a joint statement by the investors. This forensic audit at Mojocare has been in the works for the past 1-2 months, according to sources. Mojocare, primarily caters to the sexual wellness category, offering wide range of products, focused on sexual medical issues in men.
The investors have come forward with their findings, indicating the presence of financial irregularities within Mojocare’s operations. “While the analysis remains ongoing, initial findings have uncovered financial irregularities, and it has become apparent that the business model is not sustainable due to a variety of operational and market factors,” read a joint statement of the investors on the matter. This raises significant concerns about the startup’s business model and its ability to sustain operations effectively. For now, Mojocare will be scaling down its operations, and the investor group will be working with the company through this transition.
Unfortunately, the case of Mojocare is not an isolated incident within the India startup setup. In recent years, several high-profile startups and technology companies have faced allegations of financial misconduct and irregularities. This includes the likes of several particularly in Peak XV’s portfolio, such as fintech player BharatPe, GoMechanic, Zilingo, Trell, and edtech giant Byju’s. This pattern of financial impropriety has raised concerns among investors, regulators, and industry stakeholders, highlighting the urgent need for stronger oversight, transparency, and accountability within the startup ecosystem.
The development at Mojocare is similar to what happened with GoMechanic, whose founders admitted that the numbers in their accounts were manipulated to show higher sales figures. The founders of Mojocare have admitted to doing the same, elaborating that they overstated sales because of pressure and revenue targets.