Founders of ZestMoney have resigned from the startup, the latest twist in the fate of the Indian fintech whose ability to underwrite small ticket loans to first-time internet customers once drew the backing of many high-profile investors, including Goldman Sachs.
Lizzie Chapman, Priya Sharma and Ashish Anantharaman, the founders of ZestMoney, informed employees about their decision on Monday.
"Over the last few weeks, we have done a lot of thinking and it has been hard for us to arrive at this conclusion," wrote Chapman in an email seen by TechCrunch. "We have immense belief and faith in the potential that ZestMoney has. We will also ensure to provide full support to the incoming management team and do everything we can to support them for the next 4 months to ensure a smooth transition."
The departures come weeks after a potential deal to acquire ZestMoney by PhonePe fell through. A lot was riding on that potential acquisition, as ZestMoney has exhausted nearly all other funding sources in the past three quarters as investors grow cautious of funding late-stage lossmaking startups.
ZestMoney eliminated more than 100 jobs at the startup last month and founders rushed to help those leaving land 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 advancement we made in truly democratizing credit availability in the country using our path-breaking technology. We are also immensely proud of the incredible team and the unique culture we have built at ZestMoney - which was only underlined to us in recent weeks as we saw how everyone came together in supporting each other during one of the hardest times a startup can go through," wrote Chapman.
ZestMoney, which was valued at $445 million in its previous equity round 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 among a handful of Indian startups that uses 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.
Chapman said she and the other founders remain shareholders in ZestMoney.