ZestMoney founders have resigned from the startup, the latest twist in the fortunes of the Indian fintech whose ability to underwrite small card loans to new internet customers once gained the backing of many high-profile investors, including Goldman Sachs.
Lizzie Chapman, Priya Sharma and Ashish Anantharaman, the founders of ZestMoney, informed employees of their decision on Monday.
“We’ve been thinking a lot over the past few weeks and it’s been hard for us to come to this conclusion,” Chapman wrote in an email seen by TechCrunch. “We have tremendous faith and confidence in the potential that ZestMoney has. We will also ensure that we provide full support to the incoming management team and do everything we can to support them over the next 4 months to ensure a smooth transition.”
The departure comes weeks after a potential deal to acquire ZestMoney by PhonePe fell through. Much depended on that potential acquisition, as ZestMoney has exhausted nearly all other funding sources over the past three quarters as investors become cautious about funding late-stage loss-making startups.
ZestMoney cut more than 100 jobs at the startup last month, and founders rushed to help those leaving jobs elsewhere in the industry. Walmart-backed PhonePe reached an agreement with ZestMoney’s founders, board and investors to hire 130 employees.
“We are proud of how far we have come on that journey and the progress we have made in truly democratizing credit availability in the country using our breakthrough technology. We’re also extremely proud of the incredible team and unique culture we’ve built at ZestMoney – which has only been underlined for us over the past few weeks as we watched everyone come together to support each other during one of the toughest times a startup can face. going through,” Chapman wrote.
ZestMoney, which was valued at $445 million in its previous round of shares last year, raised more than $130 million from a range of investors including Ribbit Capital, Omidyar Network, Quona, Australia’s Zip, PayU, Xiaomi and Alteria Capital.
ZestMoney is one of the few Indian startups using alternative data points to build consumer credit profiles, making them eligible to make their first online purchases.
Due to low credit card penetration in India, a majority of the population does not have traditional credit scores, which banks rely on to assess creditworthiness before making loans. In addition, small loans do not provide significant returns for banks, which discourages them from issuing such financial products. In response, ZestMoney, along with other emerging startups like Axio and LazyPay, has been trying to carve out a niche in a market traditionally dominated by financial giant Bajaj Finance.
Chapman said she and the other founders remain shareholders in ZestMoney.
