ZestMoney, the Buy Now Pay Later (BNPL) firm, is set to cease operations amidst challenges in business revival and regulatory uncertainties. In a town hall meeting on December 5, management conveyed the decision to wind down, leading to the layoff of the remaining 130 employees. A minimal team will handle the closure process, and employees were assured December salaries and support in job placement.
Following the departure of three co-founders in May, ZestMoney attempted a revival with a new leadership team. Despite this effort, the founders’ resignation and the cancellation of the proposed acquisition by PhonePe added to the company’s struggles. Challenges in raising fresh capital during a funding winter compounded the situation.
In March, PhonePe terminated the acquisition deal, leading to ZestMoney laying off 20% of its workforce in April. The collapsed deal was attributed to due diligence issues, valuation disputes, concerns over business sustainability, and ZestMoney’s shareholding structure. The broader challenges in the fintech sector, including regulatory uncertainties and macroeconomic factors, also contributed to the deal’s failure.
PhonePe provided a loan of about $18 million during the acquisition evaluation, and with the deal’s cancellation, ZestMoney faced difficulties, despite being backed by Goldman Sachs and Xiaomi. The closure announcement underscores the challenges faced by ZestMoney amid industry-wide headwinds and regulatory complexities in the fintech sector.