The fin-tech firm – Razorpay, in less than six months, has tripled its valuation and is preparing to launch in the Southeast Asian markets
Becoming the first Y Combinator-backed Indian start-up to reach the much sought after unicorn status, the six-year old Bangalore-based fin-tech firm – Razorpay had topped a $1 billion valuation late last year.
The fin-tech firm, in less than six months, has tripled its valuation and is preparing to launch in the Southeast Asian markets.
The fin-tech firm on Monday has raised $160 million in its Series E financing round that valued the start-up at $3 billion, up from “a little over” $1 billion valuation in the $100 million Series D in October last year, said the firm.
Existing investors – Singapore’s sovereign wealth fund – GIC and Sequoia Capital India co-led the new round. Some other existing investors including Ribbit Capital also participated in the new round, which takes the fin-tech firm to-date raise to $366.5 million.
Accepting, processing and disbursing money online for small businesses and enterprises is done by the fin-tech firm, essentially everything Stripe does in the US and several other developed markets. But the Indian start-up’s offering goes much further than that: A neo-banking platform to issue corporate credit cards (more at the bottom of the article) has been launched by Razorpay in recent years and the firm also offers working capital to businesses.
With the global giant Stripe still nowhere in the Indian picture, the fin-tech firm has grown to become the market leader. And now, from the home country in Southeast Asian markets, the start-up plans to replicate its success, Harshil Mathur, co-founder and chief executive of Razorpay, told TechCrunch in an interview.
“We are one of the largest payments providers in the Indian ecosystem. We want to take the learning we have in India to the Southeast Asian market. Before the end of the financial year, we want to launch in one or two Southeast Asian markets”, said Mathur, adding that the new round gives it the valuation to more confidently explore some M&A opportunities to accelerate growth.
In India, for processing payments, more than five million businesses in India rely on the technology of the fin-tech firm. Facebook, telecom operator Airtel, ride-hailing firm Ola, food-delivery start-up Swiggy, and fin-tech CRED are among some of the clients.
Mathur met Shashank Kumar at IIT Roorkee College. They both realized early on that small businesses faced immense difficulties in accepting money digitally and the existing payments processing firms weren’t designed to tackle the needs of small businesses and start-ups.
Solving this issue became the goal of the fin-tech firm and as the co-founders scrambled to convince bankers to work with them, about 11 individuals shared a single apartment in the early days. Explaining the same challenge to investors numerous times, they recalled in an interview two years ago, the conversations were slow and remained in a deadlock for so long that the co-founders felt helpless.
The stories one hears today about the fin-tech firm have changed dramatically. Dozens of developers and start-up founders recently recalled their early interactions with Razorpay in a Clubhouse room, known for sharp criticism of products and how the start-up’s officials helped their businesses start with or move to the fin-tech firm’s system within hours after reaching it out.
Deepak Abbot, co-founder of Indiagold, recently recalled an incident where his start-up had missed an alert, and that coupled with a snafu at the bank, resulted in the start-up running out of funds to pay customers.
Last year Mathur said that the start-up would focus more on building the two new offerings as the fin-tech firm’s core business processing payments was fast-growing.
Offering an update, up from fewer than 5,000 in October last year, Mathur said Razorpay X now serves about 15,000 businesses. Razorpay Capital, up from less than $40 million a year ago, is now annually bandying out about $80 million to clients. The duration of the loan the fin-tech firm provides ranges from three to six months, and the ticket size is typically between 0.8 million to 1 million Indian rupees ($10,730 to $13,400).
Mathur said the fin-tech firm will focus on further growing this business in the next three years and then look at taking the start-up public. “If it was just the payments processing business, we could go public right now. But our ambitions are beyond — to become the full ecosystem for businesses. And on those new sides (neo-banking and lending), we are early”, he said.
In the past six months, the fin-tech firm’s marquee offering has grown 40 to 50 per cent month-on-month. Now, by the end of 2021, it plans to process over $50 billion in total payment volume. Also, the fin-tech firm plans to hire a number of people, as currently it has over 600 open positions, several in Southeast Asian markets.
Monday’s announcement comes at a time when a slice of Indian start-ups are raising large amounts of capital at a much frequent pace and increased valuations as investors double down on promising bets in the world’s second largest internet market.
Indian start-ups social commerce Meesho, fin-tech firm CRED, e-pharmacy firm PharmEasy, millennials-focused Groww, business messaging platform Gupshup and social network ShareChat attained the unicorn status earlier this month. TechCrunch reported last week that SoftBank is in talks to invest in Zeta and Swiggy.
The fin-tech firm offers a number of value-added services such as automating vendor payments, real-time reconciliation and analytics, managing subscriptions, GST invoicing, designing and creating websites. The start-up has also developed an app-based substitute for payments terminals (also known as POS) as well as pay-by-link for enabling offline commerce.