ZestMoney to Lay Off 30% of Workforce After Failed PhonePe Deal, Severance Pay to be Offered

• ByStartupStory     |    April 7, 2023

According to sources, ZestMoney, a fintech company backed by Goldman Sachs, is set to reduce its workforce by approximately 30% as part of a cost-cutting initiative following PhonePe’s decision to withdraw its plan to acquire the buy-now-pay-later (BNPL) platform. The sources revealed that the actual number of employees being laid off will exceed 20% and is likely to be close to 30% of the total workforce. As per the sources, ZestMoney is retaining some of its employees, while others are being transferred to PhonePe, and the remaining group is being let go.

As per the source, despite PhonePe’s decision to abandon the acquisition deal, the company is expected to hire a significant portion of ZestMoney’s laid-off workforce. The founders and top management of ZestMoney held a town hall meeting on April 6th to inform employees about the job cuts. While media reports estimate the company’s workforce to be around 450 employees, ZestMoney’s LinkedIn page suggests a higher number of 645 employees.

The job cuts are expected to affect around 135-190 employees, based on the estimated number of employees at ZestMoney. Inc42 has contacted the company for a statement on the matter and will update the article when a response is received. The news of the layoffs was originally reported by Moneycontrol.

ZestMoney has announced that the affected employees will receive one month’s salary as severance pay, as well as additional benefits such as insurance coverage and mental health support.

 

ZestMoney has decided to lay off approximately 30% of its workforce after PhonePe withdrew its plan to acquire the buy-now-pay-later (BNPL) platform. The reason behind the cancellation of the deal was reportedly due to issues related to due-diligence, disagreements over valuation, and concerns regarding the sustainability of the business and the shareholding structure. PhonePe, which is owned by Walmart, would have used the acquisition to expand into digital lending. The deal was estimated to be worth between $200 million to $300 million. The layoffs will affect about 135-190 employees, and the affected workers will receive one month’s salary as severance pay, as well as other benefits such as insurance and mental health assistance.

ZestMoney, a Bangalore-based buy-now-pay-later (BNPL) fintech startup, is reportedly laying off around 30% of its workforce after PhonePe backed out of a potential deal to acquire the company. The layoffs could affect approximately 135-190 employees, and impacted workers will receive one month’s salary as severance pay along with other benefits. ZestMoney was among the fintech startups affected by the Reserve Bank of India’s crackdown on digital lending, and saw its loss increase threefold year-on-year due to a significant rise in expenses.

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