ZestMoney, a buy now, pay later startup whose ability to make small-ticket loans to first-time online customers attracted several high-profile investors, including Goldman Sachs, is shutting down after unsuccessful efforts to find a buyer.
The Bengaluru-based startup — which also counted PayU, Quona, Zip, Omidyar Network and Ribbit Capital among its backers — employed about 150 people and had raised over $130 million in its eight-year journey.
The startup’s new leadership, which informed employees of the decision to close on Tuesday, did not respond to a request for comment. The launch will be fully completed by the end of the month, the leadership said.
The move follows the departure of ZestMoney’s founders from the startup in May this year after takeover talks with fintech giant PhonePe fell through. The founding team handed the company over to three new leaders, who raised a few million dollars from existing investors and tried to find a new path for the company.
They have been working with several investors and fintech giants in recent months to explore deals, people familiar with the matter said.
ZestMoney, once valued at $445 million, was among a handful of Indian startups that have used alternative data points to help build credit profiles for consumers, qualifying them to make their first online purchases.
India’s low credit card penetration has left a majority of the population without traditional credit scores, which banks rely on to assess creditworthiness before issuing loans. In addition, small loans do not generate significant returns for banks, discouraging them from issuing such financial products. In response, ZestMoney, along with other emerging startups like Axio and LazyPay, has sought to carve out a niche in a market traditionally dominated by financial giant Bajaj Finance.
Tuesday’s news is the second blow to Omidyar Network this week. Omidyar-backed Doubtnut — which had raised more than $50 million and once received a $150 million buyout deal — has agreed to sell for $10 million, TechCrunch reported Monday.
