New Delhi: Fintech lending startup ZestMoney is shutting down, according to two people familiar with the development.
ZestMoney management, at a town hall Tuesday, informed employees that the company would cease operations and asked them to look for new jobs because it would only be able to pay their salaries until Dec. 31, the two people said.
The development comes months after ZestMoney founders Lizzie Chapman, Priya Sharma and Ashish Anantharaman pulled out of the buy-now, pay-later startup (BNPL) in May, following failed acquisition talks with PhonePe.
Shortly after the founders resigned, the struggling startup promoted vice president of finance Mohit Chhajer, chief banking officer Mandar Satpute and senior vice president and head of growth Abhishek Sharma to take over the reins of the company.
Since March, approximately 130 ZestMoney employees have moved to PhonePe. ZestMoney, which had about 500 employees last December, was left with about 100 employees.
One of the people quoted above said ZestMoney has worked with Aditya Birla Capital and Hero Fincorp as its lending partners. “But recently, Aditya Birla Capital decided to cut its partnership with ZestMoney citing the RBI’s (Reserve Bank of India) move to increase risk weighting on consumer loans. This was the biggest setback for the fintech startup,” added this a person
The founder of a non-banking financial company, speaking on condition of anonymity, said ZestMoney’s venture capital investors have been in the market looking for buyers for the past few months. “They also contacted us,” this person said.
A query sent to Satpute did not elicit any response. Aditya Birla Capital declined to comment.
Founded in 2015, ZestMoney has raised approximately $140 million from investors, including PayU, Zip, Ribbit Capital, Quona Capital, Xiaomi, Omidyar Network and Goldman Sachs. The startup has seen its revenue increase to ₹145 crore in FY22 from ₹89 crore the previous year, but its losses widened to ₹398.8 crores of ₹125.8 crore during the same period.
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Published: 06 Dec 2023, 00:20 IST