Founders of Bengaluru-based ZestMoney, a Buy Now Pay Later (BNPL) startup backed by Goldman Sachs, resigned on May 15 after it failed to raise fresh capital. However, the founders will remain “significant” shareholders in the company.

Lizzie Chapman, Priya Sharma and Ashish Anantharaman, founders of the fintech, reportedly emailed employees to inform them about their decision.

Mandar Satupte, Chief Banking Officer, VP of Finance and FinOps Mohit Chhajer and Senior VP for Growth Abhishek Sharma will now lead the company’s charge.

After the latest twist, the BNPL startup has chalked out plans for its revival, calling it ‘ZestMoney 2.0’ or ‘ZeMo 2.0’ internally.

The founder’s decision comes months after ZestMoney’s acquisition discussions with the Indian fintech decacorn PhonePe fell through since it would have provided the digital payments platform with inorganic access to a non-banking financial corporation (NBFC).

Since last November, the latter has discussed buying a controlling share in the buy-now-pay-later (BNPL) fintech for $200 million to $300 million. PhonePe was proposing $90 million in cash for ZestMoney, taking on ZestMoney’s debt, and a $10 million founder compensation.

However, the transaction did not go through because PhonePe’s due diligence on ZestMoney was inadequate, raising questions about the creditworthiness of the fintech’s loan book. The transaction cancellation by PhonePe put the BNPL platform in desperate need of funds.

ZestMoney, founded in 2015 by Chapman, Sharma, and Anantharaman, had a 300 per cent increase in transactions during the epidemic. Its revenue increased to Rs 145 crore in fiscal year (FY) 2022 from Rs 89 crore in FY21.

However, like most other startups, it has been facing a fundraising winter in recent months, exacerbated by concerns about a worldwide recession and financial downturn. Its net loss increased from Rs 125.8 crore in FY21 to Rs 399.8 crore in FY22.

Last year, the organisation had a merchant network of over 10,000 online partners and 75,000 physical retailers. It has 17 million registered users and is available at 85,000 retail touch-points nationwide.

The company employed around 450 people. ZestMoney said last month that it would let off about 30% of its personnel as part of a cost-cutting initiative. In reality, the Goldman Sachs and PayU-backed BNPL player cut off over 20% of its personnel, or 100 people, in April as part of its business continuity and survival strategy. PhonePe has also taken on some ZestMoney staff.

Last year, ZestMoney was valued at $445 million, and it has raised around $140 million from various investors, including PayU, Zip, Ribbit Capital, Quona Capital, Xiaomi, and Omidyar Network.