ZestMoney To Shut Down In December Here's What Went Wrong For Them

Troubles began in 2022 as ZestMoney being cash-strapped, led to employee exits and high operational costs. Moreover, their FY22 loss soared 3X YoY to INR 398.8 Cr. 

The soaring losses were accompanied by a 13% bad debt rate as opposed to a 2-3% bad debt rate of other startups. Their customer acquisition costs skyrocketed to as much as INR 1,000 per customer.

ZestMoney was in dire need of funds, even if it meant a complete acquisition. This was followed by a 50% cut in their valuation as no buyer seemed interested. 

PhonePe came out to rescue ZestMoney, but their talks regarding a potential $200 Mn acquisition failed because of ZestMoney’s rising bad loans.

Following the failed acquisition and amidst all the cash-crunch, in May 2023, all 3 of the ZestMoney founders left the startup and a new management was appointed. 

The new management tried to save ZestMoney’s sinking ship, but couldn’t raise more than $5-7 Mn. 

The fintech will now wrap up its operations by the end of December and lay off its entire workforce of 150 employees.

ZestMoney will join the reigns of 15 Inidan startups that shut down in 2023.