The best of intentions often lead to catastrophic failures when intended plans fail. Just ask Elizabeth Holmes from Theranos. It’s not a USA thing; it’s a human thing. Human nature dictates that many people (not all) will resort to unethical actions when pushed. Such is the case with the Indian startup Mojocare.The Indian startup ice age continues. Mojocare, a health and wellness venture based in Bengaluru, is the most recent to face a storm. Investors at Mojocare have discovered financial irregularities at the company and have since terminated most of its employees.
According to reports, nearly 200 employees were terminated from the startup. Their Slack IDs and email addresses were deactivated without warning.
Moneycontrol reported that only 40 employees remain at the startup to streamline operations.
Mojocare claims that its business model is unsustainable, and as a result, it is reducing its operations. However, Morning Context reported that Mojocare had falsified its financial statements to demonstrate a higher revenue growth rate for some time.
Mojocare reportedly paid shady vendor partners with ties to the company’s founders, but there is currently no evidence of money leaving the company. Mojocare has denied all allegations of theft from the organization.
Mojocare, founded in 2021 by IIT graduates Ashwin Swaminathan and Rajat Gupta, is another company sponsored by Peak XV Partners (formerly known as Sequoia Capital India), accused of financial misconduct.
Mojocare had recently raised approximately $20 million in a funding round sponsored by B Capital Group, the venture capital firm of Facebook co-founder Eduardo Saverine. Before that, it had collected $3 million. On the other hand, Peak XV Partners has pledged to take additional steps to resolve compliance issues at its portfolio startups.
What then?
Moneycontrol reported that the proprietors of Mojocare admitted to inflating sales to meet revenue targets. According to reports, investors do not intend to pursue legal action. Investors are investigating how Mojocare can return 50 to 60 percent of the $23 million it raised.
Several Indian firms are simultaneously experiencing issues with their sales practices, corporate governance, and more, such as Mojocare.
Then there was the very public dispute between BharatPe executives, co-founder Ashneer Grover, and his wife Madhuri Jain Grover over the alleged misappropriation of company funds.
The trend indicates a profound lack of trust between company founders and investors, as well as the inability of investors to recognize the transgressions of companies before it is too late.
When things go wrong, the choice often made is to lie while trying to fix the issue. However, every choice has a consequence, and lying tends to lead to catastrophic consequences. This is but another example.
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