India’s RazorPay beats the pandemic to reach $1bn valuation

In its new funding round led by Singapore’s sovereign wealth fund GIC and established investor Sequoia, Indian payments gateway Razorpay has raised $100 million, joining the exclusive startup club valued at more than $1 billion in the country.

In the Series D round, current investors Ribbit Capital, Tiger Global, Y Combinator and Matrix Partners also participated. Since its launch in 2014, RazorPay has raised $206.5 million, including $75 million in the previous round of fundraising last year.

The pandemic has accelerated its path to the prestigious unicorn club for Razorpay, as the company saw a five-fold rise in transaction volume to $25 billion compared to last year and business recovered rapidly past pre-COVID-19 levels.

After online payment gateway BillDesk, Flipkart-owned PhonePe and insurtech startup PolicyBazaar, all of which were valued at over $1 billion in 2018, Razorpay is the fifth Indian fintech company to achieve ‘unicorn’ status.

Paytm, the payments app, joined the unicorn club back in 2014 and at $16 billion, is India’s most valuable startup.

With 1,300 staff, Razorpay will use the funds to launch products for its Razorpay X, the neo-banking business and to lend to Razorpay Capital, hoping to double its growth in the coming year. It will also recruit 500 people across growth, product and technology functions.

“GIC is a good long-term investor to have. Their knowledge about public markets will help us in our journey to go public. With this fundraise, we will focus on going deeper into the Indian market and broaden our product portfolio to grow our business and achieve profitability.”

Giant clients 

In order to assist organizations handle money flow, the six-year-old startup offers payments and other financial infrastructure. As it serves five million customers, including Airtel (global telecommunications service company), BookMyShow (India’s largest entertainment ticketing platform), Indian wing of social media giant Facebook and Sony (Korean electronic conglomerate), its main business continues to be its online payment gateway, which accounts for 80 percent of its revenue.

Plans ahead

While the long-term objective for Razorpay is to go public, it will first concentrate on achieving overall profitability in the next 2-3 years. In the business-to-business space, the startup will also emphasize on new acquisitions and is in talks with about five startups.

“It is too early to speak on which startups we are looking to acquire since these are still in the discussion phase. But we continue to look at inorganic avenues of growth through opportunistic acquisitions,” said Mathur.

Its neo-banking platforms RazorpayX and lending platforms Razorpay Capital were launched in 2018.

Razorpay claims that in the coming year, these two new business lines will generate approximately 35 percent of its revenue. By the end of this fiscal year, Razorpay expects its payment gateway offering to have more than 10 million customers by then. 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-19.

India has over 35 start-up unicorns, with some existing unicorns raising funds this year. Edtech startup Unacademy, Postman, the developer collaboration platform, and Nykaa cosmetics and apparel marketplace turned into unicorns this year.