New Delhi: Fintech lending startup ZestMoney is shutting down, according to two people familiar with the development.
The ZestMoney management, at a town hall on Tuesday, informed employees that the company will be winding down operations, and asked them to seek new jobs as it will only be able to pay their salaries till 31 December, the two people said.
The development comes months after ZestMoney founders Lizzie Chapman, Priya Sharma and Ashish Anantharaman stepped down from the buy now, pay later (BNPL) startup in May, after failed acquisition talks with PhonePe.
Soon after the founders quit, 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, some 130 ZestMoney employees have moved to PhonePe. ZestMoney, which had some 500 employees last December, was left with some 100 employees.
One of the people cited above said ZestMoney has been working 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 on increasing risk weight on consumer loans. This was the major setback for the fintech startup,” this person added.
The founder of a non-banking financial company, on condition of anonymity, said ZestMoney’s venture capital investors have been in the market looking for buyers for the last few months. “They reached out to us, too,” 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 about $140 million from investors, including PayU, Zip, Ribbit Capital, Quona Capital, Xiaomi, Omidyar Network and Goldman Sachs. The startup saw its revenue rise to ₹145 crore in FY22 from ₹89 crore the previous year, but its losses widened to ₹398.8 crore from ₹125.8 crore over the same period.
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Published: 06 Dec 2023, 12:20 AM IST