BNPL firm ZestMoney, once valued at $450 mn, to shut down and lay off 150 employees: Report

Buy Now, Pay Later startup ZestMoney, valued at $450 million during its peak, has decided to shut down due to multiple issues, leaving its 150 employees in the lurch, said a report on Tuesday. 

Moneycontrol reported that ZestMoney is shutting shop due to regulatory uncertainty and ZestMoney 2.0 failing to take off under a new management.

The management informed employees in a townhall on Tuesday that it will be winding down operations and will let go of the remaining 150 employees, the report added. ZestMoney once boasted a 500-strong workforce

ZestMoney's troubles began in early 2023 when Walmart-owned fintech firm PhonePe decided to halt its proposed acquisition of the Bengaluru-based startup. 

The deal, which was poised to fetch between $200-$300 million, has hit a snag in the latter stages of due diligence as the parties involved were unable to come to terms on the valuation, and other issues, such as high default rate or non-performing assets (about 10-12 per cent), surfaced during the process. The discussed valuation was a far cry from the $450 million ZestMoney earned during last funding round in September 2021, Business Today reported in March 2023.

Founded by Lizzie Chapman, Priya Sharma and Ashish Anantharaman in 2016, ZestMoney operates an EMI and Pay Later network. ZestMoney disburses the funds directly to the merchant from its lending partner, allowing customers to repay the lender in smaller installments over time instead of paying the full purchase amount upfront.

The Bangalore-based company, founded in 2015, was a pioneer in the Buy Now, Pay Later sector, providing customers instant digital loans facilitated by Nahar Credit, a non-banking financial company (NBFC) acquired by ZestMoney in 2019.

The fintech startup had managed to raise roughly $140 million from top-tier investors, including PayU, Zip, Ribbit Capital, Quona Capital, Xiaomi, Omidyar Network, Goldman Sachs, among others. ZestMoney saw its revenue increase to Rs 145 crore in the fiscal year 2022, up from Rs 89 crore in FY21, though its losses also surged to Rs 398.8 crore from Rs 125.8 crore a year earlier.