ZestMoney, a buy now, pay later startup whose ability to underwrite small ticket loans to first-time internet customers attracted many high-profile investors, including Goldman Sachs, is shutting down following unsuccessful efforts to find a buyer.
The Bengaluru-headquartered startup — which also identified 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 the employees about the decision to shut down Tuesday, didn’t respond to a request for comment. The startup will fully wind down by the end of the month, the leadership said.
The move follows ZestMoney founders quitting the startup in May this year after acquisition talks with fintech giant PhonePe didn’t materialize. The founding team handed over the firm to three new leaders, who raised a few million dollars from existing investors and attempted to find a new path for the company.
They engaged with many 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 used alternative data points to help build credit profiles on consumers, making them eligible 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 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, has attempted to carve out a niche in a market traditionally dominated by financial giant Bajaj Finance.
Tuesday’s news is the second blow for Omidyar Network this week. Omidyar-backed Doubtnut — which had raised over $50 million and once received a $150 million acquisition deal — agreed to sell for $10 million, TechCrunch reported Monday.