In a surprising turn of events, all three co-founders of ZestMoney, a trailblazer in the digital lending sector, have decided to step down. This announcement follows the collapse of a proposed takeover by PhonePe, a subsidiary of Walmart, just two months prior.
Former CEO Lizzie Chapman, along with Priya Sharma, the ex-CFO & COO, and erstwhile CTO Ashish Anantharaman, tendered their resignations in an emotional open letter to the company’s employees. “After weeks of self-reflection, we’ve reached this difficult decision,” Chapman expressed in the letter.
What was once a thriving workforce of 500 at ZestMoney has dwindled to a mere 100, with around 170 staff members moving to PhonePe since the deal fell through in March. Since its inception in 2015, the Bangalore-based firm has been a pioneer in the Buy Now, Pay Later segment, offering instantaneous digital loans via Nahar Credit, a non-banking financial company (NBFC) that ZestMoney acquired in 2019.
PhonePe initiated negotiations to buy ZestMoney in November 2022, with early speculations estimating the deal value between $200-$300 million. The deal would have granted PhonePe entry into the lucrative NBFC arena, a prospect tempting to many fintech firms.
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Yet, the acquisition was unexpectedly terminated in March, triggered by concerns over the quality of ZestMoney’s loans. Despite the exposure of several NBFCs to ZestMoney’s loan portfolio, the fintech startup has succeeded in raising about $140 million from eminent investors such as PayU, Zip, Ribbit Capital, Quona Capital, Xiaomi, Omidyar Network, and Goldman Sachs. ZestMoney’s revenue climbed to ₹145 crore in FY22 from ₹89 crore in FY21, though its losses also swelled to ₹398.8 crore from ₹125.8 crore.
Chapman assured in her parting email that the founders’ faith in the company’s potential remained unshaken and that they’d ensure a seamless transition to new leadership over the next four months. “Our vision for ZestMoney, to make life affordable for millions of Indians, was born eight years ago. We take immense pride in our incredible team and the unique culture we’ve fostered at ZestMoney,” she added.
Though their leadership tenures have ended, Chapman, Sharma, and Anantharaman will continue to be substantial shareholders in the company.
This news article is based on a BusinessToday report.
