ZestMoney founders, on Monday, announced that they will be resigning from their respective positions. The resignation comes amid the company’s financial crisis after the acquisition deal with PhonePe failed to go through.
ZestMoney is in deep waters right now as all three of its founders announced their resignation in a heartfelt address to the employees. The company, which used to have approximately 500 employees under its workforce, currently has only 100 employees after 170 of the employees migrated to PhonePe amid a failed acquisition deal.
The resignations of the founders comes after the acquisition deal with Walmart owned PhonePe failed to materialize in March 2024. The deal would have allowed PhonePe to introduce and establish itself in the Non-Banking Financial Company (NBFC) market. The acquisition deal was canceled by PhonePe reportedly because of doubts over ZestMoney’s loan quality.
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ZestMoney founders proud of what the company has achieved
ZestMoney was founded in 2015 by Lizzie Chapman, Priya Sharma, and Ashish Anantharaman.
During their time with the company, Lizzie Chapman acted as the Chief Executive Officer (CEO), Priya Sharma as the Chief Financial Officer (CFO) and the Chief Operating Officer (COO), and Ashish Anantharaman as the Chief Technology Officer (CTO).
The co-founders announced their resignation on Monday via a letter to the employees.
Lizzie Chapman said in the letter addressed to the employees, “We have done a lot of introspection over the past few weeks, and it’s been tough for us to reach this decision.”
She further added that the founders are extremely proud of the incredible team and the unique culture that they have built over the years since the company was founded.
In her address, Chapman also stressed that the founders are fully committed to support the new management and allow for a smooth transition over the next four months.
It was also made clear that the founders will continue to be major shareholders in the company.
The Economic Times reported that current investors in the company are investing new money into the business to keep the cash flowing for the next 12 months. In the meantime, the new management will focus on rebuilding the company.
PhonePe abandoned the acquisition deal over concerns regarding loan quality
ZestMoney quickly became a pioneer in the buy now, pay later market after its launch. The platform worked by providing its customers with instant digital loans which were facilitated through the Non-Banking Financial Company (NBFC) Nahar Credit.
Nahar Credit was acquired by ZestMoney in 2019.
Negotiations regarding PhonePe acquiring ZestMoney started back in November 2022. PhonePe, which was looking forward to establishing itself in the NBFC market, was set to acquire the company for $200-300 million.
Unfortunately for ZestMoney, the deal never went through and PhonePe decided to pull itself out of the deal in March 2024.
According to reports, several Non-Banking Financial Companies (NBFCs) had access to the company’s loan portfolio, which made PhonePe question the loan quality provided by platform.Â
During the time the negotiations were still ongoing, a bunch of ZestMoney employees joined PhonePe. Around 170 employees have left ZestMoney to join PhonePe.
ZestMoney, which had approximately 500 employees working in the company, is currently left with around only 100 working employees who face further uncertainties now that the founders have quit.
