India's Razorpay becomes unicorn after new $100 million funding round
Headquartered in Bangalore, Razorpay, one of the few Indian fintech startups that has seen accelerated growth in recent years, has joined the coveted Unicorn Club after raising $ 100 million in a new funding round, the startup said for payment processing on Monday with.
The new funding round, a Series D, was jointly led by Singapore's sovereign wealth fund GIC and Sequoia India, the six-year-old Indian startup said. In the new round, the startup was valued at "just over 1 billion US dollars," said co-founder and CEO Harshil Mathur in an interview with TechCrunch.
Existing investors, Ribbit Capital, Tiger Global, Y Combinator and Matrix Partners also participated in the round, bringing Razorpay's total increase so far to $ 206.5 million.
Razorpay accepts, processes, and pays out money online for small businesses. In recent years, the startup has expanded its offering to provide loans to companies and launched a neo-banking platform on which, among other things, company credit cards can be issued.
Mathur and Shashank Kumar (pictured above), who met at IIT Roorkee, founded Razorpay in 2014. They began exploring payment processing opportunities after realizing how difficult it was for small businesses like young startups to accepting less money online than a decade ago. Back then, there were very few payment processing companies in India and startups had to create a long list of documents.
The early team of around 11 people in Razorpay shared a single apartment when the co-founders met with over 100 bankers to persuade banks to work with them. Talks were slow and stuck at a dead end for so long that the co-founders felt helpless in explaining the same challenge to investors multiple times, they recalled in an interview last year.
To say that things have changed for Razorpay would be an understatement. It is the largest corporate payment provider in India, Mathur said. Razorpay, which competes with Prosus Ventures' PayU, accepts a wide range of payment options including credit cards, debit cards, mobile wallets, and UPI.
"Razorpay has established itself as the clear market leader with its strong focus on customer experience and product innovation," said Choo Yong Cheen, GIC's chief investment officer, private equity, in a statement. "GIC has a long track record of working with leading fintech companies worldwide and is excited to partner with Razorpay on its journey to transform payments and banking."
Razorpay's customers include the affordable Decacorn Oyo, the e-commerce giant Tokopedia, the top food delivery startups Zomato and Swiggy, the online learning platform Byju's, the giant Gojek, the supply chain platform Zilingo, the caller ID service Truecaller; the travel ticket companies Yatra and Goibibo; and the telecommunications giant Airtel.
The startup expects to process approximately $ 25 billion worth of transactions for nearly 10 million of its customers this year - five times more than last year - Mathur said.
He attributed some of the growth to the coronavirus pandemic, which he believes has accelerated digital adoption in many companies.
On the neo-banking and capital side, Razorpay expects RazorpayX and Razorpay Capital to account for about 35% of the startup's revenue by the end of March next year.
Mathur said the startup's payment processing service continues to be the fastest growing business and doesn't require a lot of capital to grow. Therefore, the startup will use the new funds to expand its neo-banking offering to include supplier payments as well as cost and tax management and other features.
The startup, which is slated to work with over 50 million companies by 2025, could also acquire a few firms as it explores opportunities for inorganic expansion in the neo-banking category, Mathur said.
“We will continue to be an effective contributor to the growth of the industry, support adoption in the underserved markets, and drive new practices and thinking for the industry. And this investment fits in perfectly with our growth strategy, ”he said.
While the coronavirus pandemic has slowed business in India, around half a dozen startups in the country, including the online learning platform Unacademy and Pine Labs, have secured unicorn status.
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