ZestMoney to lay off 100 employees after PhonePe acquisition falls through

ZestMoney’s founders and leadership informed employees about the layoff at a town hall meeting on April 6, they said. The impact is expected to be felt across departments.

Several of the startup’s employees have already started reaching out to other employers on job platform Linkedin for placement.

“The town hall happened yesterday (Thursday) and at least 100 employees are expected to be laid off. ZestMoney is trying hard to negotiate with PhonePe to absorb all the folks out. And PhonePe has not ruled out the discussions,” a person aware of the matter said on Friday, requesting anonymity.

ET was the first to report on March 30 that PhonePe had pulled back from the deal to acquire ZestMoney over concerns arising from its due diligence of the platform. This is seen as a big blow for cash-strapped ZestMoney, at a time when funding for technology startups has nosedived, raising questions on the fintech’s survival.

ZestMoney declined to comment on the layoffs.

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Moneycontrol reported about ZestMoney’s layoffs earlier on Friday. On March 30 the company had also held a town hall informing employees about the deal talks with PhonePe falling through. Cofounder Priya Sharma also reached out to a few founders in the ecosystem seeking their help in outplacing some of the employees of the startup.

ET had reported citing sources that questions over the sustainability of the business and ZestMoney’s shareholding structure spread across its Singapore and Indian entities might have also emerged as roadblocks, finally leading to the failure of the acquisition talks.

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People in the know said that PhonePe was offering $90 million in cash for ZestMoney, a company founded in 2015 by Lizzie Chapman, Sharma and Ashish Anantharaman. The transaction also entailed taking on $35-40 million of ZestMoney’s debt along with a $10 million founder payout, these people said.

PhonePe had sanctioned a $20 million loan to ZestMoney even as the due diligence process was ongoing, ET had reported.