Goldman Sachs-backed Indian Buy Now Pay Later (BNPL) startup ZestMoney, has shut down operations following failure to find a buyer.
The move to shut down the Bengaluru-headquartered startup which was last valued at $450 million, comes after it failed to raise fresh capital from Quona Capital, Omidyar Network India, Flourish Ventures, Zip and Scarlet Capital.
Management at the company in a town hall meeting on December 5, informed employees that it would be shutting down this month, which would see about 150 employees laid off.
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Speaking concerning the shutdown of the company, ZestMoney Co-founder Lizzie Chapman said,
“Over the last few weeks, we have done a lot of thinking and it has been hard for us to arrive at this conclusion. We have immense belief and faith in the potential that ZestMoney has. We will also ensure to provide full support to the incoming management team and do everything we can to support them for the next four months to ensure smooth transition”.
The company will retain a legal and finance team to oversee the closure. The decision to shut down operations comes months after the startup founders resigned from their positions, leaving ZestMoney in the hands of a new management, as well as few investors.
Recall that in March this year, Walmart-backed PhonePe, called off its deal to buy ZestMoneg over due diligence concerns. After the deal fell through, ZestMoney laid off 100 employees.
Before it’s shutdown, ZestMoney facilitated Buy Now Pay Later (BNPL) loans by disbursing the purchase amount from lending partner directly to the merchant, allowing the customer to repay the lender in instalments.
Also, it accepted 10,000 online stores and 75,000 physical retail stores, with 17+ million registered users. The platform enabled easy, cardless checkouts with partner merchants, EMIs at 0% interest, no hidden charges, no joining fees, quick paperless approvals, amongst others.
ZestMoney was among a handful of Indian startups that used alternative data points to help build credit profiles on consumers, making them eligible to make their first online purchases. It partnered with registered banks and NBCs to facilitate consumer and personal loans.
India’s low credit card penetration left a majority of the population without traditional credit scores, which banks rely on to evaluate creditworthiness before issuing loans. Furthermore, small loans do not yield significant returns for banks, disincentivizing them from issuing such financial products.
In response, ZestMoney, alongside other emerging startups like Axio and LazyPay, attempted to carve out a niche in a market traditionally dominated by financial giant Bajaj Finance.
The startup’s innovative technology and work to make affordable digital finance accessible led to their selection as a 2020 technology pioneer by the World Economic Forum.