Fintech lending startup ZestMoney is reportedly shutting down, as disclosed in a recent town hall meeting with employees, according to sources familiar with the matter.
During the town hall on Tuesday, ZestMoney’s management conveyed the decision to wind down operations, instructing employees to explore new job opportunities, as the company will be able to pay their salaries only until December 31, as per the information provided by the sources.
This development follows the departure of ZestMoney founders Lizzie Chapman, Priya Sharma, and Ashish Anantharaman from the buy now, pay later (BNPL) startup in May. The exit occurred after unsuccessful acquisition negotiations with PhonePe.
Following the founders’ departure, the struggling startup appointed Mohit Chhajer as vice-president of finance, Mandar Satpute as chief banking officer, and Abhishek Sharma as senior vice-president and head of growth to lead the company.
Since March, approximately 130 ZestMoney employees have transitioned to PhonePe. ZestMoney, which had around 500 employees in December of the previous year, now retains approximately 100 employees.
According to one source, ZestMoney had collaborations with Aditya Birla Capital and Hero Fincorp as lending partners. However, Aditya Birla Capital recently decided to terminate its partnership with ZestMoney, citing the Reserve Bank of India’s move to increase risk weight on consumer loans. This development is identified as a significant setback for the fintech startup, according to the source.
The founder of a non-banking financial company, speaking on the condition of anonymity, revealed that ZestMoney’s venture capital investors have been actively seeking buyers for the past few months. “They reached out to us, too,” the person disclosed.
A query sent to Mandar Satpute did not receive a response, and Aditya Birla Capital declined to provide comments.
Established in 2015, ZestMoney has raised approximately $140 million from investors like PayU, Zip, Ribbit Capital, Quona Capital, Xiaomi, Omidyar Network, and Goldman Sachs. Despite seeing an increase in revenue to ₹145 crore in FY22 from ₹89 crore the previous year, the startup experienced widened losses, amounting to ₹398.8 crore compared to ₹125.8 crore over the same period.
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