Mojocare, a healthtech startup, has decided to cease operations and refund remaining capital to investors. Shareholders reached a resolution during a recent board meeting, and the remaining capital will be returned after addressing outstanding vendor payments. Investors are currently negotiating with vendors to settle these financial obligations. Mojocare had approximately $12 million in its bank account in June.

This development comes in the wake of a controversy earlier in the year when Mojocare's founders admitted to inflating revenues and manipulating other financial figures during internal presentations. Established in 2020 by former Chiratae executive Ashwin Swaminathan and former Mobile Premier League vice-president Rajat Gupta, Mojocare is a digital wellness platform focusing on areas such as sexual wellness, women's wellness, mental wellness, and hair care.

Mojocare secured $20.6 million in its Series A funding round led by B Capital in August 2022, despite a challenging funding landscape. The startup faced interest from prominent angel investors like Kunal Shah and Ankit Nagori, and the industry watched to see how Mojocare would differentiate itself from competitors like Misters, Good Health Company, Sirona, Mosaic Wellness, and BoldCare.

Despite stiff competition, Mojocare achieved a remarkable 38X year-on-year revenue growth, reaching INR 12.12 crore in FY22 compared to a mere INR 32 lakh in FY21. However, this aggressive growth was accompanied by a surge in total expenses from INR 1.83 crore in FY21 to INR 19.46 crore in FY22, resulting in a net loss of INR 5.5 crore for the fiscal year ending in March 2022, compared to INR 1.1 crore in FY21.

Mojocare, a startup with substantial funding, faced financial scandals after a Deloitte audit revealed revenue misreporting. The co-founders admitted to manipulating numbers, including round-tripping funds, creating fraudulent invoices, and inflating revenue. As a result, they were asked to step down and a new CFO took over.

In July, reports surfaced indicating that some investors were considering a fire sale, while others were contemplating the company's closure and capital return. It appears the board has chosen the latter course. Additionally, Deloitte's financial forensic report revealed that both Gupta and Swaminathan allegedly misled investors and the board by inflating revenue figures.

Mojocare's case highlights the need for improved governance within Indian startups. Over the past year, several startups, including GoMechanic, Trell, Zilingo, BharatPe, and Ranul Yadav's 4B Networks, have faced similar controversies, including fund misappropriation.