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ZestMoney’s founders are out of business, the latest twist in India’s fintech fortunes for the first time its ability to write small-ticket loans to Internet customers once won the backing of several high-profile investors, including Goldman Sachs.
Lizzy Chapman, Priya Sharma and Ashish Anatharaman, co-founders of ZestMoney, informed employees of their decision on Monday.
“We’ve done a lot of thinking over the last few weeks and it’s hard for us to come to a conclusion here,” Chapman wrote in an email seen by TechCrunch. “We have great faith and belief in the potential of ZestMoney. We also assure the incoming management team of their full support and will do our best to support them for the next 4 months.
The departures come weeks after the chance to acquire ZestMoney through PhonePe collapsed. A lot was riding on that potential acquisition, as ZestMoney has exhausted all other sources of funding over the past three quarters as investors fund late-stage lossmakers.
ZestMoney shed more than 100 jobs at its startup last month, and founders are rushing to help those who are laying off jobs elsewhere in the industry. Walmart-backed PhonePe has reached an agreement with ZestMoney’s founders, board and investors to hire 130 employees.
“We’re proud of how far we’ve come on that journey and the progress we’ve made using our ground-breaking technology to truly democratize access to credit in the country. We’re also proud of the amazing team and unique culture we’ve built at ZestMoney – a very difficult start for us in recent weeks.” It’s when we see how everyone has to support each other in time,” Chapman wrote.
Valued at $445 million in an equity round last year, ZestMoney has raised over $130 million from various investors including Ribbit Capital, Omidyar Network, Quona, Australia Zip, PayU, Xiaomi and Alteria Capital.
ZestMoney is one of the few Indian startups that uses alternative data points to help build credit profiles on consumers, qualifying them to make their first online purchase.
India’s low credit card theft has led a majority of the population to bypass traditional credit scores, which banks rely on to assess creditworthiness before issuing loans. In addition, small loans do not generate high profits for banks, which prevents them from offering such financial products. In response, ZestMoney, along with other new startups like Axio and LazyPay, has tried to carve out a niche in a market traditionally dominated by financiers Bajaj Financial.
Chapman said she and the other founders remain shareholders in ZestMoney.
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