ZestMoney Sets Up New Leadership Team, A Day After Founders Resign

“As we go on to the next chapters of our own journeys, we are confidently passing the baton to Mohit Chhajer, Mandar Satpute and Abhishek Sharma to lead the company into the future,” said Lizzie Chapman, chief executive officer of ZestMoney, in a LinkedIn post. 

ZestMoney’s founders have resigned, several weeks after fintech giant PhonePe decided to halt its proposed acquisition of the buy now, pay later (BNPL) platform.

Lizzie Chapman, Priya Sharma and Ashish Anantharaman, the founders of ZestMoney, informed employees about their decision on Monday evening. This has put about the 100 employees at the Bengaluru-based firm in an uncertain future. The firm has been finding it challenging to raise fresh capital amid a funding winter, according to the sources.

“Over the last few weeks, we have done a lot of thinking and it has been hard for us to arrive at this conclusion. We have decided to step down from our roles as CEO (Lizzie), CFO & COO (Priya), and CTO (Ashish) at ZestMoney,” said Chapman, in a letter to the employees on Monday evening.

In March this year, PhonePe called off deal to acquire ZestMoney. In April, ZestMoney laid off 100 employees, or about 20 per cent of its workforce. The deal with PhonePe, which was to fetch between $150 million and $300 million, collapsed over lapses in due diligence, disagreement over valuation, business sustainability, and ZestMoney’s shareholding structure, according to people cited above. The deal’s collapse is also being attributed to a slowdown in the financial technology (fintech) sector amid a funding winter, a difficult regulatory environment, and macroeconomic uncertainty, said other sources.

PhonePe gave about $18 million as a loan to ZestMoney when it was evaluating the acquisition. ZestMoney, which is backed by Goldman Sachs and Xiaomi, had about 450 employees, all of whom were expected to be absorbed by PhonePe if the acquisition proceeded. The company is now left with some 100 people.

Founded by Lizzie Chapman, Priya Sharma, and Ashish Anantharaman in 2015, ZestMoney allows customers to pay for products over time, but use them right away. Increasing smartphone penetration, the cheapest data plans in the world, and a boom in online shopping have propelled the demand for pay-later offerings in the country.

ZestMoney has a registered user base of 17 million and is live at 85,000 retail touchpoints across India.

There was a media report which said that ZestMoney's tech assets and bad loans are being transferred to PhonePe. However, on Monday night, PhonePe’s Sameer Nigam clarified that PhonePe has not taken any of ZestMoney’s tech assets,  intellectual property, clients, and business or non-performing assets. He also said that PhonePe has not taken ZestMoney’s NBFC (non-banking financial companies) business and is not hiring any more employees from the company. “We bought a copy of their tech IP and separately hired about 130 ZestMoney employees, said Nigam in a tweet. 

The company had a valuation of $470 million that it achieved in the last funding round. ZestMoney raised $50 million in September 2021, which the company had topped with an additional $20 million raise as part of its Series C round. The firm has raised a total of $140 million from investors such as Australia’s BNPL platform Zip, Goldman Sachs, Quona Capital, and Xiaomi.