Mojocare's Layoff Crisis Triggers Investor Scrutiny & Financial Review

Following the sudden layoffs at healthcare startup Mojocare, where a minimum of 170 employees were terminated, the startup's investors, including B Capital, Chiratae Ventures, and Peak XV Partners' Surge, have released a statement confirming that they have commenced a review of the healthtech startup's financial statements. The startup also faces financial irregularities and challenges with its business model.

A collective statement from Mojocare investors revealed, "Major investors of Mojocare have initiated a comprehensive review of the company's financial statements."

Financial Irregularities Uncovered

According to media reports, major investors of Mojocare have discovered financial irregularities within the Bengaluru-based healthtech startup. It appears that the company inflated sales bills and overstated revenues in an effort to meet its targets, indicating a corporate governance lapse within the Indian startup ecosystem. 

Investors Initiate Review

A joint statement issued by Mojocare's investors confirmed the initiation of a review into the company's financial statements. While the analysis is still ongoing, preliminary findings have uncovered financial irregularities, leading to the realization that the current business model is unsustainable due to various operational and market factors, the media report revealed. Consequently, Mojocare has decided to scale down its operations, and the investor group is actively supporting the company throughout this transitional phase.

Layoffs and Scale-Down Plans

Mojocare has terminated the employment of approximately 170 individuals. The startup plans to downsize its operations due to the perceived unsustainability of its business model. In an effort to improve capital efficiency and unit economics, Mojocare has taken this difficult decision. 

A spokesperson for Mojocare acknowledged the challenging market conditions and stated that the company had made these tough choices in an attempt to enhance their unit economics. Despite their best efforts, the business fundamentals have not yielded favorable results over the past few months.

D2C Model and Funding

The healthcare startup Mojocare operates on a direct-to-consumer (D2C) model, providing solutions for reproductive health, fertility, weight loss treatment, hair loss treatment, and doctor consultations for product recommendations. The Bengaluru-based startup previously raised USD 20 million in a Series A funding round led by B Capital Group, the venture firm of Facebook co-founder Eduardo Saverin. Prior to that, the company had secured USD 3 million in funding.

Industry-wide Layoffs and Financial Reporting Lapses

Mojocare joins the ranks of other startups, including BharatPe, GoMechanic, and Zilingo, which have faced scrutiny for lapses in financial reporting in recent years. These incidents are part of a larger trend, with several well-funded players in the healthtech industry, such as HealthifyMe, Practo, Mfine, and MediBuddy, resorting to significant employee layoffs amid funding constraints.

Founding Team and Future Prospects

Mojocare was founded in May 2021 by Ashwin Swaminathan and Rajat Gupta. As the company scales down its operations, it aims to navigate a path towards profitability and sustainability with a smaller, yet efficient team. The startup will now focus on determining the best course of action for its future growth and stability in the highly competitive health and wellness market.

As the investigation into Mojocare's financial irregularities continues, industry stakeholders and investors are keenly observing the developments and awaiting further updates from the health-tech startup.