ZestMoney finds a new life in a surprise acquisition by financial services firm DMI Group
After a tumultuous year, ZestMoney, the once-hot Indian fintech startup backed by Goldman Sachs, has been acquired by financial services firm DMI Group. This news came as a surprise as the startup had announced its closure just last month.
A person familiar with the situation shared that the acquisition was mostly aimed at gaining and retaining talent, with every investor in ZestMoney experiencing losses.
“This acquisition provides DMI with exclusive rights to the use of all Zest brands, making our NBFC arm DMI finance a preferred lender on the Zest platform,” said DMI Group in a statement.
DMI also plans to integrate ZestMoney’s checkout financing platform into its services, while leveraging its own customer base, strong balance-sheet, and risk-management experience to drive growth for Zest’s online and offline merchant network.
“ZestMoney has been a pioneering provider of checkout finance in India,” said Shivashish Chatterjee, co-founder and joint MD of DMI. “We have been partnered with them for over 8 years in various capacities and firmly believe that this acquisition is a crucial step in our journey to provide digital financial inclusion at scale across India.”
The acquisition news comes after ZestMoney’s founding team stepped down in May of last year following unsuccessful acquisition talks with fintech giant PhonePe. The startup, which had raised $130 million in its journey, was left in the hands of a new leadership team, who attempted to pivot and find a new path for the company.
Despite attracting high-profile investors like PayU, Quona, Zip, Omidyar Network, and Ribbit Capital, ZestMoney faced challenges in underwriting small ticket loans to first-time internet customers. Eventually, these challenges led to the decision to shut down the startup.
However, with the acquisition by DMI Group, ZestMoney has found a new life and the potential for growth with the support of a well-established financial services firm. As the digital landscape evolves, ZestMoney will play a crucial role in providing digital financial inclusion to customers and merchants alike in India.