A day after all three co-founders of buy now pay later (BNPL) startup ZestMoney resigned from their positions, the company announced the elevation of existing senior employees to top roles.
Mohit Chhajer, vice president of finance and financial operations; Mandar Satpute, chief banking officer; and Abhishek Sharma, senior vice president of growth were named as the fresh leadership team at ZestMoney.
The BNPL firm is also finalising a new investment round from its existing shareholders, including Quona Capital, Zip, Omidyar Network India, Flourish VC and Scarlet Digital. The funding round is expected in the next few weeks, according to a fresh statement issued on Tuesday. To date, ZestMoney has raised around $120 million in financing, including both equity and venture debt capital.
Impressed with the company’s progress, Ganesh Rengaswamy, managing partner at Quona Capital, said, “ZestMoney has continued to scale effectively since the digital lending guidelines were announced in India.”
Rengaswamy added: “ZestMoney’s credit quality remains high and the company is close to breakeven. We are happy to support this next chapter for ZestMoney, which promises to be an exciting one on their path to profitability.”
Echoing the sentiment, Peter Gray, Global COO at ZIP, said, “The opportunity for ZestMoney remains massive. Less than 4% of Indians have credit cards or access to formal credit. India’s exploding population only points to more opportunity ahead, and we are excited about ZestMoney’s long-term potential.”
Point-of-sale (PoS) financing is the fastest-growing category of retail lending in India, growing by approximately 25% in the last two years.
On Monday, ZestMoney co-founders Lizzie Chapman, Priya Sharma and Ashish Anantharaman stepped down from their leadership roles after the company’s $200-million acquisition deal with PhonePe fell through over valuation disagreements and due-diligence issues. The three co-founders will continue to be shareholders in the company, the statement added.
Over the past few months, fintech decacorn PhonePe had been in talks to acquire ZestMoney for around $200-300 million, a discount from a valuation of around $450 million that the startup commanded during its $20-million fundraising in June 2022. However, the acquisition was called off since ZestMoney’s due diligence did not meet PhonePe’s standards.
ZestMoney’s board had earlier said that any or all options that would ensure business continuity were on the table and being considered after the unsuccessful PhonePe deal. The BNPL startup also laid off around 100 employees or 20% of its workforce last month after its deal failed. The startup will be paying outgoing employees a month’s salary as severance and also extend other benefits like insurance, as per reports. PhonePe also absorbed some of ZestMoney’s employees and waived off an $18-million loan given to the latter last year during the acquisition talks.
Through the planned acquisition, PhonePe wanted to enter the digital lending space.
PhonePe’s CEO Sameer Nigam clarified on his Twitter profile on Monday that the company has purchased a copy of ZestMoney’s IP and hired and absorbed around 130 employees in total. “PhonePe has not taken over ZestMoney’s clients, business or non-performing assets. We have also not taken over ZestMoney’s NBFC business either, and we will not be absorbing any more employees,” he added in his tweets.
Founded in 2015, ZestMoney currently operates a fully automated BNPL platform that integrates mobile tech, digital banking and AI, enabling people to apply for and receive digital credit in mere seconds. Its EMI Network is integrated with Amazon, Flipkart, Myntra, MakeMyTrip and Nykaa, Samsung, Apple, Vivo, Croma, and Reliance Digital.