GoMechanic was an Indian car servicing startup founded in 2016 that offered multi-brand car repair and maintenance services.1014 In January 2023, co-founder Amit Bhasin admitted to financial reporting errors and the company laid off 70% of its workforce.46
Timeline
| Date | Event | Source |
|---|---|---|
| 2016 | GoMechanic was founded by Amit Bhasin, Kushal Karwa, Nitin Rana, and Rishabh Karwa. | 1014 |
| 2016-12 | GoMechanic raised a seed round of $250,000. | 7 |
| 2017-08 | GoMechanic raised a seed round led by Orios Venture Partners. | 7 |
| 2019-01 | GoMechanic raised a Series A round of $4.9 million led by Alfa Ventures, Peak XV Partners, and Sequoia Capital. | 7 |
| 2019-12 | GoMechanic raised a Series B round of INR 1,050,000,000 led by Chiratae Ventures. | 7 |
| 2020-06 | GoMechanic raised an undisclosed Series B round. | 7 |
| 2020-10 | GoMechanic forayed into the spare parts business. | 3 |
| 2021-06 | GoMechanic raised a Series C round of $35 million led by Tiger Global Management at a valuation of $285 million. | 3710 |
| 2022-03 | Morsebiz was founded by Kushal Karwa's wife Salonee Chitlangia and her brother Raunak Chitlangia, with GoMechanic founders as strategic advisors. | 3 |
| 2022-08 | Morsebiz generated revenue for the first time by fulfilling two orders worth $9,000. | 3 |
| 2023-01 | GoMechanic co-founder Amit Bhasin admitted to financial reporting errors and announced layoffs of 70% of the workforce. | 46 |
| 2023-01 | EY India conducted a forensic audit of GoMechanic and found fictitious garages, selective payments, and discrepancies in revenue and user metrics. | 313 |
| 2023-03 | GoMechanic was acquired by a consortium led by Lifelong Group. | 816 |
| 2023-11 | GoMechanic 2.0 secured $6 million in funding from a marquee investor. | 714 |
Money raised
GoMechanic raised a seed round of $250,000 in December 2016.7 GoMechanic raised a seed round led by Orios Venture Partners in August 2017.7 GoMechanic raised a Series A round of $4.9 million in January 2019 led by Alfa Ventures, Peak XV Partners, and Sequoia Capital.7 GoMechanic raised a Series B round of INR 1,050,000,000 in December 2019 led by Chiratae Ventures.7 GoMechanic raised an undisclosed Series B round in June 2020.7 GoMechanic raised a Series C round of $35 million in June 2021 led by Tiger Global Management at a valuation of $285 million.3710 GoMechanic raised a Series C round of $6 million in November 2023 led by Sunil Kant Munjal.7 GoMechanic had raised more than $60 million over the years.810
Investors named in the sources: Tiger Global Management7810, Sequoia Capital3710, Orios Venture Partners3710, Chiratae Ventures3710, Alfa Ventures7, Peak XV Partners7, Sunil Kant Munjal7, Stride Ventures314, SoftBank Vision Fund3813, Khazanah Nasional Berhad3814, Norwest Venture Partners14, Pawan Munjal10.
What happened
GoMechanic was founded in 2016 by Amit Bhasin, Kushal Karwa, Nitin Rana, and Rishabh Karwa.1014 GoMechanic operated as a multi-brand network of car service centers.10 GoMechanic raised a seed round of $250,000 in December 2016.7 GoMechanic raised a seed round led by Orios Venture Partners in August 2017.7 GoMechanic raised a Series A round of $4.9 million in January 2019 led by Alfa Ventures, Peak XV Partners, and Sequoia Capital.7
GoMechanic raised a Series B round of INR 1,050,000,000 in December 2019 led by Chiratae Ventures.7 GoMechanic raised an undisclosed Series B round in June 2020.7 Around October 2020, GoMechanic forayed into the spare parts business.3 GoMechanic launched the spare parts vertical to provide automobile spare parts to its authorised garages.3 GoMechanic began exporting spare parts and claimed to have exported to South Asian, South American, African and Middle-East countries.3
For the year ended March 2022, GoMechanic's topline grew more than 2.5 times to Rs 91 crore, compared with Rs 34 crore in FY21.3 GoMechanic's expenses surged to Rs 210 crore from Rs 74 crore in the same period.3 In 2021-22, GoMechanic closed a funding round of $42 million from Tiger Global at a valuation of $285 million.3 GoMechanic was in talks with SoftBank Vision Fund and Khazanah for a potential $70-80 million financing round.3 SoftBank first engaged with GoMechanic in early 2022 for a potential funding deal but the talks fell through due to a valuation mismatch.3
SoftBank did not agree to the valuation demand of $1.2 billion, and was willing to offer $850-900 million.3 Six months later, GoMechanic went back to SoftBank and restarted discussions for a potential $30-35 million investment at a valuation of $600-650 million.3 In March 2022, Morsebiz was founded by Kushal Karwa's wife Salonee Chitlangia and her brother Raunak Chitlangia, with Karwa and other GoMechanic cofounders acting as strategic advisors.3 Morsebiz pitched itself as the 'Alibaba for auto components' in presentations to investors across Delhi-NCR, attempting to raise $4 million.3 Morsebiz generated revenue for the first time in August 2022 by fulfilling two orders worth $9,000.3
Morsebiz estimated it would clock $519,000 in revenue by March 2023.3 There was a plan for GoMechanic to hive off its auto spare parts business, merge it with Morsebiz, and pick up a 30% stake in the startup.3 In January 2023, GoMechanic co-founder Amit Bhasin confessed to financial lapses in a LinkedIn post.346 Bhasin said the company made 'grave errors in judgment as we followed growth at all costs, particularly in regard to financial reporting, which we deeply regret.'4 GoMechanic laid off 70% of its staff.346
A third-party firm was to conduct an audit of the business.6 EY India conducted a forensic audit of GoMechanic.313 The investment due diligence highlighted issues like fictitious garages, selective payments to certain garage units, and discrepancies in revenue and user metrics.3 An EY report found that nearly 60 of 1000+ GoMechanic service centres violated accounting norms and overstated revenues.13 GoMechanic's investors began looking for potential suitors, but not many were interested.3
GoMechanic was estimated to be servicing 800-1,000 cars per day.3 Seven out of eleven garages listed on Google Maps as GoMechanic branded ones that ET surveyed across South Bengaluru did not exist.3 Some garage owners said GoMechanic had often paid in spare parts instead of cash.3 Garage owners said there were fake locations created on maps.3 GoMechanic was often in conflict with garage owners over pricing the servicing of a car.3
Some garage owners had pending payments from GoMechanic.3 Investment officials were under the impression that GoMechanic had invested in the garages, but a garage owner clarified it was only a branding partnership.3 Some garage owners expressed concerns over slowing leads from GoMechanic in the last 20 days.3 One garage owner said he had heard of payments stuck to the tunes of Rs 4 lakhs accrued at each garage level.3 GoMechanic took a 15% commission cut from any billed amount.3
In March 2023, GoMechanic was acquired by a consortium led by Lifelong Group.816 Lifelong Group said it won the auction to acquire GoMechanic.8 Lifelong Group said the transaction would assist in preserving the ecosystem and enable providing continued livelihood to the employees at GoMechanic.8 GoMechanic operated 800 workshops and serviced 30,000 vehicles in January, according to Lifelong Group.8 The startup's valuation was slashed to $30 million in recent weeks.8
In November 2023, GoMechanic 2.0 secured $6 million in funding from a marquee investor.14 After the acquisition, the company's sole purpose was to create transparency and be more cost-effective and efficient.14 Under the leadership of Muskan Kakkar, the company expanded its business lines to include 'GoMechanic Service Business', 'GoMechanic Spares,' and 'GoMechanic Accessories’.14 The firm said it experienced strong growth, with a fourfold increase in revenue.14 GoMechanic Service handled an influx of 800 cars per day.14
GoMechanic ventured into the luxury and premium services market with 'GoMechanic LUXE', managing over 600 luxury cars per month.14 The MILES membership programme saw membership sales per month increase by 72 per cent in October 2023 compared to April 2023.14 GoMechanic Accessories offered products such as vacuum cleaners and Android car screens on e-commerce platforms like Amazon and Flipkart.14
Legal outcomes
Where the founders are now
Himanshu Arora and Muskan Kakkar became the new co-founders of GoMechanic after the acquisition.1415 Rishabh Karwa and Nitin Rana are listed as co-founders on the GoMechanic website.15
Sources
- Gomechanic news: ETtech Long Read: How GoMechanic founders floated new business as trouble mounted at car servicing startup - The Economic Times, The Economic Times, Feb 13, 20
- Daily Crunch: GoMechanic lays off 70% after investors discover 'founders knowingly misstated facts' | TechCrunch, TechCrunch, 2023-01-18
- GoMechanic fires 70 per cent employees, founder admits to financial reporting errors, India Today, 2023-01-18
- How Much Did GoMechanic Raise? Funding & Key Investors | Clay, clay.com, Mar 25, 20
- Distressed Indian startup GoMechanic acquired by Lifelong Group-led consortium | TechCrunch, TechCrunch, 2023-03-29
- "GoMechanic's erroneous speedometer" - Ecosystem Ventures, Ecosystem Ventures, 2023-01-23
- Autotech firm CarTrade in talks to acquire GoMechanic, indianstartupnews.com
- CarTrade in talks to buy GoMechanic: Report, yourstory.com, Mar 11, 20
- GoMechanic 2.0: New Founders secure $6 mn funding from marquee investor, business-standard.com, 2023-11-08
- GoMechanic - Your Trusted Car Care Partner - Know more about us!, GoMechanic
- India's GoMechanic acquired by consortium led by car ..., reuters.com, Mar 29, 20
How this case file was put together
Every statement on this page carries a numbered note, and every note points to a court record, a regulatory filing or a named publication in the list of sources. Each statement was checked against the text of the sources it cites before it was published: a figure, a date or a name the cited source does not contain was cut rather than kept. Allegations are shown as allegations, with their status at the time of the source (filed, charged, convicted, pleaded, settled, dismissed or pending). Quoted lessons are the words of the person or publication named with them, copied from the cited source; nothing here is our own opinion of why the company failed.
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