Goldman Sachs-backed fintech ZestMoney is laying off approximately 30% of its workforce as part of a cost-cutting exercise after PhonePe cancelled its plan to acquire the buy-now-pay-later (BNPL) platform.
According to one of the sources, the number of employees laid off will undoubtedly exceed 20% and will most likely be close to 30% of the workforce. “A portion of the workforce has been retained, some people are going to PhonePe, and a third group is being laid off,” the source said.
While PhonePe decided not to proceed with the acquisition, the source added that it is likely to hire a sizable portion of ZestMoney’s workforce.
In a town hall meeting on Thursday, the founders and top leadership of ZestMoney informed employees about the layoffs (April 6). While media reports indicate that the company employs approximately 450 people, the company’s LinkedIn page lists 645 employees.
As a result, the number of employees affected by the layoffs could range between 135 and 190. ZestMoney has been contacted by Inc42 for comment on the matter. The story will be updated upon receiving a response from the startup.
ZestMoney will pay affected employees one month’s salary as severance pay, as well as other benefits such as insurance and mental health assistance.
The layoffs come just a week after PhonePe called off the acquisition of ZestMoney. Due diligence issues, disagreements over valuation, business sustainability, and shareholding structure were reported to be the primary reasons for the Walmart-owned payments giant’s decision to withdraw from the deal.