Mojocare investors have found “financial irregularities” at the Indian health and wellness startup and are moving to scale down its operations, they said in a statement Sunday.
The move follows the Bengaluru-headquartered startup, backed by Peak XV, B Capital and Chiratae Ventures, laying off some 150 employees, a majority of the workforce, earlier this week.
In a joint statement, the investors said they were reviewing the financials of Mojocare and the findings thus far suggested that the business model employed by the startup was “not sustainable due to a variety of operational and market factors.”
The investors didn’t specifically say what prompted them to launch a probe into Mojocare. Indian news outlet Morning Context reported on Sunday that Mojocare had been inflating its revenue figures for sometime, often engaging with and paying sketchy vendor partners who were related to the founders. In a statement, Mojocare said it categorically denies “all accusations of money being taken out of the company.”
Mojocare investors said they will be scaling down operations at the startup.
The three-year-old startup, which has raised about $23 million altogether, said earlier this week that its business fundamentals had not delivered in recent months.
“Facing difficult market conditions, we at Mojocare have had to make tough decisions to improve our unit economics,” a company spokesperson said earlier this week.
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Mojocare joins an alarming roster of Sequoia-backed startups in the Asian region facing allegations of misconduct. GoMechanic, Zilingo, BharatPe and Trell also have had governance and auditing issues in the past year-and-a-half.
Peak XV Partners, formerly known as Sequoia India and Southeast Asia, last year pledged to take proactive steps to do more to drive increased compliance at its portfolio startups.
The firm, the most prolific startup backer in the region, said it will work on a wide range of things, including: governance trainings for founders and senior management, implementation of whistleblower policies, more independent board representation, and ask for more disclosures and more rigorous adoption of internal audits and controls.
