In mounting troubles for GoMechanic, one of its largest investors, Orios Venture Partners, which owns 17.1%, has written down the value of its investment in the company, as per an update the VC firm shared with its limited partners, a copy of which FE has seen.

While the value was not mentioned, sources said it could erode about 60% of Orios’ investment value, subject to findings from the forensic audit that EY was currently carrying out. GoMechanic last raised $42 million at a valuation of $285 million in June 2021, but was in talks to raise around $40 million from SoftBank at a valuation of around $700 million more recently. The talks, however, did not materialise as EY India, during the deal’s due-diligence, found GoMechanic was inflating revenues and understating costs to artificially push up the company’s valuation, as reported earlier.

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“While our exposure from Fund 1 was 7.79% of the committed corpus, at last round’s valuation, the asset represented around 1.27x of the fund’s multiple on invested capital (MOIC). We are writing down this value,” Orios’ letter to its LPs read.

Orios, KPMG and PWC did not reply to mails seeking details till the time of going to the press on Thursday.

All of GoMechanic’s major investors like Sequoia Capital India, Tiger Global, Chiratae Ventures and others on Wednesday said they were kept in the dark about the startup fudging its financials, until founders confessed earlier this week. That was despite the Gurugram-based company regularly holding board meetings and giving monthly updates, leaving no scope for any suspicion.

The company reported that its revenue had doubled from Rs 47.2 crore in FY21 to Rs 96.8 crore in FY22 while its losses jumped over 4X from Rs 27.4 crore in FY21 to Rs 114.3 crore in FY22. Those financials were signed off by auditors like PwC and KPMG. “The investors have commissioned EY to do a forensic audit, and will determine the next steps for the company. Surprisingly, KPMG and PwC, past auditors of the company, did not disclose any issues in their reports either,” Orios’ note on Thursday added.

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Now, EY’s audit, which is understood to be completed in a few weeks, will reveal exactly how much of the value firms will VCs like Orios have to write down. “The next steps hinge on EY’s findings. This could include investors partially selling their stake or even making a full exit for existing investors,” people close to the development told FE.

Founded in 2016, GoMechanic was run by Amit Bhasin, Kushal Karwa, Nitin Rana and Rishabh Karwa.