Fintech startup ZestMoney is about to shut down as the efforts of the new management to revive the company have failed to materialise.
The fintech startup will wrap up operations by the end of December and lay off its entire workforce of 150 employees, the startup’s new leadership team announced this in a town hall meeting on Tuesday (December 5).
The development has come after the company failed to raise a follow-on round or find a buyer to save its sinking ship.
Meanwhile, the company has promised two months of severance payment and outplacement support to the outgoing employees.
The shutdown comes just close on the heels of the company’s original cofounders – Lizzie Chapman, Priya Sharma and Ashish Anantharaman – quitting the startup in May this year. Their resignations also came after the acquisition talks with fintech major PhonePe went awry. At the time, the company had to trim 30% of its workforce.
As more and more skeletons started to tumble out of the BNPL platform’s closet, the leadership of Mohit Chhajer, Mandar Satpute and Abhishek Sharma took charge of ZestMoney. Subsequently, the three new leaders reportedly raised $5 Mn – $7 Mn from a group of investors, including existing backer Quona Capital.
As the trio attempted to find the future course for the company, they engaged with investors and fintech giants, in recent months, to explore deals which failed to take off.
Founded in 2015 by Chapman, Sharma and Anantharaman, the Bengaluru-based startup offered BNPL services to its customers, enabling them to pay their shopping bills in three instalments at 0% interest rate.
Backed by names such as Prosus, Quona, Zip, Omidyar Network and Ribbit Capital, ZestMoney raised more than $130 Mn during its lifetime. At its peak, it commanded a valuation of $445 Mn – $450 Mn and was considered the poster child of the BNPL ecosystem in the country.
The company went south as mounting losses and multiple waves of loan defaults set the ball rolling for the company’s demise. ZestMoney’s losses grew three-fold year-on-year (YoY) to INR 398.8 Cr in the financial year 2021-22 (FY22) against INR 125.8 Cr reported in FY21. However, revenues grew by 1.6X YoY to INR 145 Cr in FY22.
The development comes amid a spate of startup shutdowns that hit the Indian startup ecosystem in 2023. As per Inc42, as many as 15 major Indian startups, after burning $85 Mn of investor capital, shut shop this year for reasons ranging from failure to raise follow-on rounds to lack of product market fit (PMF).
Among the major names that wound up operations this year included edtech platform FrontRow, crypto startups Pillow and We Trade, healthtech startup ConnectedH, among others.
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