Bengaluru-based ZestMoney is slashing about 20% of its workforce, which will impact nearly 100 employees, as per a LiveMint report. The buy now, pay later platform’s talks of an acquisition by fintech company PhonePe had collapsed earlier. Backed by Goldman Sachs and Xiaomi, ZestMoney currently employs around 450 people.
The department-wide layoff, announced as part of its business continuity and survival plan, comes weeks after PhonePe halted the $200 – $300 million acquisition deal at the end of March 2023. The talks, which began in November 2022, fell through owing to lapses in due diligence, disagreement over valuation, shareholding structure and a slowdown in the financial technology sector, a Business Insider report stated.
ZestMoney was founded in 2015 by Lizzie Chapman, Priya Sharma and Ashish Anantharaman. The company raised its last funding round at a $450 million valuation and has previously been in acquisition talks with Pine Labs and BharatPe.
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According to a Moneycontrol report, the company’s severance package includes a month’s salary which has provision for insurance, mental health assistance and other perks. The Walmart-backed PhonePe may also hire a number of workers from ZestMoney, the report added.
The acquisition deal, if successful, would have enhanced its competitive position in the fintech market and marked its foray into digital lending.
Layoffs have affected the edtech sector too as Unacademy recently laid off 12 per cent of its staff or about 380 employees. It is the unicorn’s fourth round of layoffs in the past one year to enhance core business profitability. Co-founder and CEO Gaurav Munjal also announced that the top leadership will take a ‘permanent’ pay cut of up to 25 per cent.
