ZestMoney, the Goldman Sachs-backed Indian fintech startup once valued at $450 million, has sold itself to financial services firm DMI Group, the two said late Wednesday, in a fire sale that caps 12 tumultuous months for the once-hot new-age lender.
The two firms didn't disclose the terms of the deals, but a person familiar with the situation said the acquisition is largely a way for DMI to poach and retain talent and that every investor in ZestMoney lost money.
In a statement, DMI Group said the deal grants it with the exclusive right to the use of all Zest brands and make the NBFC arm DMI Finance a preferred lender on the Zest platform. DMI also plans to offer its customers ZestMoney's checkout financing platform. "DMI will also bring its customer base, balance-sheet strength and significant risk-management experience to drive growth across Zest’s online and offline merchant network," DMI said in a statement.
News about the acquisition follows ZestMoney -- a buy now, pay later platform whose ability to underwrite small ticket loans to first-time internet customers attracted many high-profile investors -- announcing last month that it would be shutting down the startup.
ZestMoney founders quit the startup in May last year after acquisition talks with fintech giant PhonePe didn’t materialize. The founding team handed over the firm to three new leaders, who raised a few million dollars from existing investors and attempted to find a new path for the company.
The Bengaluru-headquartered startup — which identified PayU, Quona, Zip, Omidyar Network and Ribbit Capital among its backers — employed about 150 people and had raised over $130 million in its eight-year journey.
"ZestMoney has been a pioneering provider of checkout finance in India. We are always looking for best-in-class solutions to enhance both the engagement with - and the experience of - our customer and merchant base," said Shivashish Chatterjee, co-founder and joint MD of DMI, in a statement. "We have been partnered with ZestMoney for 8+ years in various capacities. We firmly believe that this acquisition will be an important step in our journey to provide digital financial inclusion at scale across India."