A group of shareholders in the troubled healthtech startup Mojocare is reportedly considering taking legal action against the founders, following revelations of financial irregularities. This comes just a day after an investor group uncovered discrepancies in the startup’s financial statements.
Mojocare’s investors, which include venture capital firms and angel investors, have expressed their intent to wind down the company’s operations and distribute the remaining capital among themselves, according to a statement released last week. The investors have shared a draft note alleging that the founders artificially inflated the business numbers. A forensic audit of Mojocare’s books, being conducted by Deloitte, is expected to be completed within the next 10 days.
Prominent investors in the Bengaluru-based startup include B Capital, founded by Eduardo Saverin of Facebook, Chiratae Ventures, and Peak XV’s Surge (formerly Sequoia Capital India’s Surge).
The decision to pursue legal action will depend on the final report of the forensic audit, as confirmed by an investor source. However, the source added that it is already evident that the founders misrepresented the revenue figures, and discussions are underway regarding the nature of the potential legal case.
Mojocare, founded in 2020 by Ashwin Swaminathan and Rajat Gupta, has raised approximately $24 million since its inception. In May 2023, the founders reportedly confessed to manipulating the numbers, which involved falsifying invoices, inflating revenue, and diverting funds through inventory sold to relatives.
While Mojocare reported a total revenue of INR 12.12 crore in the fiscal year 2022, nearly 38 times higher than the INR 32 lakh reported in the previous year, these figures may be subject to change due to the recent revelations.
Following the confession, the investor group appointed a CFO and requested the founders to step down. Operations at the startup were subsequently shut down. Mojocare still retains INR 80-100 crore in its bank account, and discussions are ongoing regarding the complete closure of the startup and the return of remaining capital to existing investors.
Mojocare now joins the growing list of Indian startups that have come under scrutiny for financial irregularities, including GoMechanic, Zilingo, Trell, and Rahul Yadav’s 4B, which have faced similar controversies and negative headlines.
