Bengaluru-based BNPL startup ZestMoney is shutting down its operations after failing to recover from financial struggles and unsuccessful attempts to revive the business.
The startup, which was once valued at over $400 million, made the announcement on December 5, 2023, marking a significant downturn in its fortunes, Moneycontrol reported.
ZestMoney's troubles began to surface following the departure of its founding team in May 2023 which included CEO Lizzie Chapman, Priya Sharma CFO & COO, and CTO Ashish Anantharaman.
Following this, the new management, backed by investors, was appointed; however, it failed to steer the company back to profitability, a challenge still faced by many elite startups.
A critical blow came when UPI payments giant PhonePe withdrew from acquisition talks due to concerns about ZestMoney's financial health, leaving the startup in a precarious position.
In an attempt to salvage the situation, ZestMoney launched a revival plan named "ZestMoney 2.0" or "ZeMo 2.0." However, this initiative did not yield the desired results, leading to further instability.
As part of the closure, ZestMoney will lead to the layoff of the remaining 150 employees, although they have been promised two months of severance pay and support for finding new employment.
A significant factor in ZestMoney's downfall was the regulatory changes by the Reserve Bank of India (RBI), which affected the entire BNPL sector. These regulations restricted non-bank institutions from certain financial activities, impacting ZestMoney's business model.
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