ZestMoney, the once-prominent Indian buy now, pay later startup, is set to shut down after being unable to secure a buyer despite its noteworthy backers, including Goldman Sachs. The Bengaluru-based company, valued at $450 million at its peak, employed around 150 people and had garnered over $130 million in funding during its eight-year journey.
The founders stepped down in May following unsuccessful acquisition talks with PhonePe, passing the reins to a new leadership team. Despite their efforts, the startup couldn’t find a new direction and will wind down operations by the end of the month.
ZestMoney’s approach involved leveraging alternative data to assess creditworthiness, addressing the challenge posed by low credit card penetration in India. The startup aimed to enable first-time internet users to make online purchases by underwriting small-ticket loans based on unconventional credit profiles.
The closure of ZestMoney comes amidst a broader landscape where fintech startups, like Doubtnut backed by Omidyar Network, also face challenges. Doubtnut recently agreed to a $10 million sale after initially securing a $150 million acquisition deal.
This development sheds light on the hurdles faced by emerging startups in navigating India’s financial sector, particularly in offering financial products traditionally dominated by established giants. ZestMoney’s fate signals the complexities of operating in a market where the majority lacks traditional credit scores, presenting challenges for innovative ventures in the fintech space.
