Indian buy now, pay later (BNPL) startup ZestMoney is reportedly closing down after unsuccessful attempts to find a buyer.
Once valued at $445 million, the company had attracted high-profile investors such as Goldman Sachs, PayU, Quona, Zip, Omidyar Network, and Ribbit Capital, TechCrunch reported Tuesday (Dec. 5).
It will wind down by the end of December, according to the report.
ZestMoney did not immediately reply to PYMNTS’ request for comment.
The startup’s ability to underwrite small ticket loans for first-time internet customers had made it an attractive proposition in the market, according to the report.
However, ZestMoney faced a setback in May when acquisition talks with FinTech giant PhonePe fell through, leading to the departure of its founders, the report said.
In their absence, a new leadership team took over and raised a few million dollars from existing investors in an effort to chart a new course for the company, per the report. However, despite engaging with various investors and FinTech giants, they were unable to secure a deal.
ZestMoney’s closure is a blow to the Indian startup scene, as it was among the few companies using alternative data points to build credit profiles for consumers, according to the report. In a country with low credit card penetration, many individuals lack traditional credit scores that banks rely on for evaluating creditworthiness. ZestMoney aimed to bridge this gap by providing small loans to those previously ineligible for such financial products.
The firm was founded in 2015 to fill the banking void and give people digital access to credit and loans, PYMNTS reported in December 2019. It assessed data points aside from credit scores and used artificial intelligence (AI) to help India’s population create a credit-worthy profile.
PYMNTS Intelligence has found that the most important digital shopping feature in India is payment method availability. Eighty-nine percent of merchants in the country offer payment method choice, according to the “2023 Global Digital Shopping Index: India Edition,” a PYMNTS and Cybersource collaboration.