In its new funding round, led by Singapore’s sovereign wealth fund GIC and established investor Sequoia India, Razorpay raised $100 million and became a fintech unicorn entering the elite startup club.
In the Series D round, established investors Ribbit Capital, Tiger Global, Y Combinator, and Matrix Partners have also participated. Since its launch in 2014, it has raised $206.5 million, including $75 million in the previous round of fundraising last year.
After online payment gateway BillDesk, Flipkart-owned PhonePe, and insuretech startup PolicyBazaar, all of which were valued at over $1 billion in 2018, Razorpay is the fifth Indian fintech company to achieve ‘unicorn’ status.
Back in 2014, Paytm joined the unicorn club and is the nation’s most successful start-up at $16 billion.
With 1,300 staff, Bengaluru-based Razorpay will use the funds to launch products for its Razorpay X neo-banking business and lend to Razorpay Capital, looking to double its growth in the coming year. It will also employ 500 people across growth, product, and technology functions.
“GIC is a strong investor to have in the long run. Their knowledge of public markets and investment in companies such as Bajaj Finserv Ltd and Bandhan Bank Ltd will enable us to go public on our journey. We will concentrate on moving deeper into the Indian market with this fundraising and expanding our product range to increase our business and achieve profitability, ”said Harshil Mathur, Razorpay’s chief executive, and co-founder.
While the long-term objective for Razorpay is to go public, in 2-3 years it will first concentrate on achieving overall profitability. In the business-to-business space, the startup will also focus on new acquisitions and is in discussions with around five startups.
It’s too early to talk about which startups we want to buy because they are still in the process of discussion. “But through opportunistic acquisitions, we continue to look at inorganic growth avenues,” said Mathur.
In order to help companies handle money flow, the six-year-old start-up offers payments and other financial infrastructure. Its main business continues to be its online payment portal, which accounts for 80% of its sales, as it serves five million customers, including Airtel, BookMyShow, Facebook India, and Sony.
The neo-banking and lending platforms RazorpayX and Razorpay Capital were launched in 2018, respectively.
Razorpay X enables users to open current accounts through two banking partners and offers payroll-related workforce management solutions and has almost 10,000 companies using the platform. To its current services, it aims to incorporate invoice and cost control solutions.
Currently, Razorpay Capital disburses Rs 250 crores in loans per month for a period of 3-6 months, with the average ticket size varying from Rs 7 lakh to Rs10 lakh. The start-up functions as a marketplace and operates with five Non-Banking Financial Companies (NBFCs) and two customer lending banking partners.
Razorpay claims that in the coming year, these new business lines will generate approximately 35 percent of its sales. By the end of this fiscal year, Razorpay expects its payment gateway service to be leveraged by more than 10 million clients. Last year, the company released its corporate credit card with plans to extend the product to younger companies and organizations.
The business aims to expand into South Asian markets this year, Mathur said, but the aims are on hold due to covid.
India has over 35 start-up unicorns, with some established unicorns this year raising funds. This year, the Edtech startup Unacademy, the Postman developer collaboration platform, and the cosmetics and apparel marketplace Nykaa became unicorns.