Why is ZestMoney shutting down; reasons behind downfall of homegrown fintech startup

Homegrown digital EMI financing platform ZestMoney, backed by Goldman Sachs, is shutting down operations after a number of unsuccessful makes an attempt to discover a purchaser, media reported on Wednesday. ZestMoney was valued at $445 million and raised over $130 million from a spread of traders, like Ribbit Capital, Omidyar Network, PayU, Xiaomi and Alteria Capital, amongst others.

According to a report in TechCrunch, the startup’s new management knowledgeable the workers concerning the choice to close down on Tuesday.

“The startup will totally wind down by the top of the month, the management mentioned,” in keeping with the report.

There was no official phrase from ZestMoney on winding up its operations.

The purchase now, pay later (BNPL) startup gave small loans to first-time web clients.

In May this 12 months, the founders of ZestMoney resigned because the fintech startup failed to lift contemporary capital. A possible deal to amass ZestMoney by main fintech firm PhonePe fell by means of just lately. Bengaluru-based ZestMoney earlier laid off about 20 per cent of its workforce, which impacted almost 100 workers. The firm final 12 months had a community of retailers with greater than 10,000 on-line companions and 75,000 bodily shops.

It reported a registered consumer base of 17 million and was reside at 85,000 retail touch-points throughout the nation.

Key components resulting in ZestMoney’s downfall

Leadership transition

The closure follows the exit of ZestMoney’s founders—Lizzie Chapman, Priya Sharma, and Ashish Anantharaman—in May, subsequent to unsuccessful acquisition discussions with PhonePe.

Employee dynamics

Post the founders’ departure, the management mantle was handed to Mohit Chhajer, Mandar Satpute, and Abhishek Sharma. However, the startup witnessed a major worker exodus, with round 130 personnel transferring to PhonePe, decreasing ZestMoney’s workforce to roughly 100 workers from the five hundred recorded in December.

Partnership woes

ZestMoney confronted a considerable setback as Aditya Birla Finance terminated its partnership, citing the Reserve Bank of India’s choice to extend the danger weight on client loans. This transfer was a major blow to the fintech startup’s operational stability.

Investor quest for consumers

Venture capital traders of ZestMoney have reportedly been actively searching for consumers for the corporate out there over the previous few months.

Financial snapshot

Despite having raised a powerful $140 million from traders like PayU, Zip, Ribbit Capital, Quona Capital, Xiaomi, Omidyar Network, and Goldman Sachs since its inception in 2015, ZestMoney struggled to steadiness its monetary sheets. While the startup skilled a income rise to ₹145 crore in FY22 from ₹89 crore the earlier 12 months, losses widened considerably to ₹398.8 crore from ₹125.8 crore over the identical interval.

This unexpected closure marks the top of ZestMoney’s journey, leaving its workers in a difficult place and highlighting the turbulent panorama of the fintech business.