A MID LAYOFFS and financial fraud, startups face not only a funding winter but the forthcoming Ides of March.
The discovery that GoMechanic – an auto services startup that has raised $62 million (Rs 510 crore) in venture capital and private equity funding since it was founded in 2016 and had a valuation of $350 million (Rs 2,900 crore) – cooked its books follows on the heels of several other startups accused of financial fraud, including Singapore-based fashion e-commerce tech firm Zilingo.
What do these cases mean for the future relationship between founders and funders? First and foremost, due diligence will sharpen. GoMechanic’s accounting malpractice was spotted only when Japan’s SoftBank Vision Fund vetted its balance sheet ahead of a fresh round of funding. It was set to lead a $75 million (Rs 640 crore) round. EY is now doing a forensic audit of GoMechanic’s books while the founders go on a forced leave of absence.
But financial fraud is not the only worry for both founders and funders of startups in India and globally where accounting frauds have spiked, especially in crypto firms like FTX. The other concern is the basic business model of startups.
This story is from the February 25, 2023 edition of Business World India.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the February 25, 2023 edition of Business World India.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber? Sign In
The Astrology Cryptocurrency Of In New Financial Year
Whether you're a seasoned investment enthusiast or just starting out on your financial journey, Vedic astrology can be beneficial, especially in markets as volatile as the crypto sphere
KRISHNA CONSCIOUSNESS
The reader can almost feel that the mortal journey of Krishna has ended, yet Krishna Consciousness has manifested again as Keshav. Krishna-the Seventh Sense reveals the continuity of existence, notwithstanding the limitation of the one who exists. This book is a treasure
Recreating The Maruti Moment In EVs
SAJJAN JINDAL on the joint venture with MG Motor, electric mobility, charging infrastructure and more
Sustainable Models of Support for Women Entrepreneurs in India
Personal one-on-one mentorship is a key intervention that is most required amongst MSMEs and young startup founders today
ELEVATED ROAD TO SUCCESS
Honda Cars India is exporting 'Made in India' cars back to Japan showcasing India as a strong manufacturing hub for Honda sedans and SUVs. What is its game plan?
HOW HINDUJA GROUP'S BID TO ACQUIRE RELIANCE CAPITAL VIOLATES INDIA'S FDI, INSURANCE NORMS
The bid structure has come into question with the insurance regulator pointing out that it not just allows Hinduja Group-backed foreign entities to own 100 per cent in Reliance Capital’s insurance business but also lets them bid on borrowed money in total disregard of Indian laws and norms
Taking Astrology To The Masses
Driven by profound fascination and belief in the cosmic intricacies, Rajeev Bhandari, Founder, AstroSagga is on a mission to offer affordable courses to fuel employment in astrology sector
"My Mission Is To Make Temples Across India Better"
Sharad Kamath, Founder and CEO, 3ioNetra identified the need fora comprehensive software solution to address the complex billing and accounting needs of temples based on his experiences as avolunteer and organiser at religious functions
A Conduit Between Spiritual and Tech Realms
In November 2023, Vama secured a Seed Plus round led by Wavemaker Partners, bringing its total funding to USS 2.8 million
"AI Will Catalyse Hockey Stick Growth Of Astro Sector In India"
The current faithtech landscape in India leans heavily towards entertainment, says Punit Pandey, Founder, AstroSage and believes the key lies in shifting the revenue model from entertainment to trust
