“There was a town hall held on Monday by the management where the founders informed the rest of the team that they are leaving the company,” said one of the persons briefed on the matter.
In an internal communication to the team, Chapman said that the founders will continue to be major shareholders and will support the transition to a new management over the next four months. “ Over the last few weeks, we have done a lot of thinking and whilst it has been very hard for us to arrive at this conclusion, we have decided that we will step away from our Operating roles as CEO (Lizzie), CFO & COO (Priya) and CTO (Ashish),” Chapman said in her communication.
Also read | ETtech Exclusive: PhonePe may waive off ZestMoney’s $18 million debt after failed acquisition
“We have 100% belief and faith in the potential that ZestMoney has and the new management team who will step up at this time and we will do absolutely everything we can to support them and you, both over the next 4 months as we transition, and over the longer term,” she added.
According to data from Tracxn, the three founders collectively owned around 18% in Primrose Hill Ventures, the corporate entity of ZestMoney. The other shareholders include PayU, Ribbit Capital, Austrian buy-now-pay-later (BNPL) platform Zip and Omidyar Network.
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PhonePe walked out of a deal to acquire ZestMoney citing issues it found during the due diligence process, reported first by ET on March 30.Also read: Why PhonePe-ZestMoney deal fell through
After the deal fell through, PhonePe decided to forgo an $18 million loan it had handed out to the cash-strapped ZestMoney. ET reported on April 26 that the Walmart-owned digital payments major was looking to strike a commercial agreement with the lending firm in lieu of the loan. PhonePe’s move provides a lifeline to ZestMoney temporarily, with the debt burden eased off. However, the cash position at the company is still uncertain, said multiple people aware of the matter.
PhonePe was offering $90 million in cash for ZestMoney, with the transaction also entailing taking on ZestMoney’s debt and a $10 million founder payout.
With the founders leaving ZestMoney, shareholders and the company board will put a future plan in place, said people in the know, as existing backers shore up capital for the company’s survival.
ZestMoney is understood to be looking to pivot to a new model where it can offer its lending platform as a service to other fintechs, banks and non-bank financial companies (NBFC), as ET reported earlier.