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Bengaluru, NFAPost: Leading fintech startup Razorpay which registered accelerated growth joined the most coveted unicorn club after raising $100 million in a new financing round.

Rasorpay’s latest funding round of Series D is co-led by Singapore’s sovereign wealth fund GIC  and Sequoia India. According to Arvian Consulting, the Series D funding values the startup at “a little more than $1 billion.

“The six-year old startup also found participation for the Series D round from the existing investors like Ribbit Capital, Tiger Global, Y Combinator and Matrix Partners. Razorpay succeded in raising a total fund of $206.5 million till date. It is expected to further fuel the growth of the company,” said Arvian Consulting analyst.

Arvian Consulting analyst also highlighted the fact Razorpay is the fifth Indian fintech startup to achieve ‘unicorn’ status after online payment gateway BillDesk, PineLabs, Flipkart-owned PhonePe and insurtech startup PolicyBazaar, which were all valued at over $1 billion in 2018. Paytm entered the unicorn club back in 2014 and is the most valuable startup in the country at $16 billion.

Neo-banking platform

Besides accepting and processing money, Razorpay online platform helps small businesses and enterprises in their daily transactions. In addition to the existing service, Rasorpay also expanded its service offering in recent years to loan services to businesses. The company also unveiled its neo-banking platform to issue coporate credit cards and other related products and services.

According to the company sources, Bengaluru-based Razorpay will be using the funds to launch products for its neo-banking business Razorpay X and lending business Razorpay Capital. Besides expecting the funding to double its growth in the coming year, the company also wants to increase its headcount from the current 1300 by adding around 500 more.

Expressing happiness over the new funding round, Razorpay chief executive and co-founder Harshil Mathur said GIC is a good long-term investor to have.

“Their knowledge about public markets and investment in firms like Bajaj Finserv Ltd and Bandhan Bank Ltd 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,” said Razorpay chief executive and co-founder Harshil Mathur.

Harshil Mathur and Shashank Kumar, who met each other at IIT Roorkee, started Razorpay in 2014. They began to explore opportunities around payments processing business after realising just how difficult it was for small businesses such as young startups to accept money online less than a decade ago. There were very few payment processing firms in India then and startups needed to produce a long-list of documents.

Tech enablement

The company started its initial journey with a team size of about 11 people at Razorpay shared a single apartment. The worked hard to clinch around 100 bankers by convincing them on the tech-enabled business. Even though they succeeded in bringing on board banks who were not willing to believe their business model, the Razorpay journey has helped the company to compete with another payment service company PayU.

Razorpay Cofounder and Chief Technology Officer Shashank Kumar said the company with a simple vision of helping every business accept digital payments.

“Over the years, we have made huge strides towards making it a reality. Then and now, our commitment lives on – understanding the problems our customers face and building solutions through what we know best – technology. Through the years, the payments industry has gone through multiple changes,” said Razorpay Cofounder and Chief Technology Officer Shashank Kumar.

He also pointed out that the company’s success till date has been the result of an impassioned bunch of folks and a culture of innovation.

“The funding also comes with a major milestone of Razorpay becoming the newest unicorn in India. From the earliest Razor to the latest hire, we empower everyone to unleash their creative potential aided by our values and our singular focus towards solving ambitious problems,” said Razorpay Co-founder and Chief Technology Officer Shashank Kumar.

Paradigm shit by Covid-19

He also highlighted the fact that with Covid-19 brought a paradigm shift in the way commerce happens in the country and Razorpay is seeing multiple new demographics of businesses looking to move online and start leveraging internet and mobile technology.

“We provide businesses the flexible ability to accept payments across multiple channels – whether online, through links, via self-hosted pages or third party branded stores or through a QR code. Serving a heterogeneous and continuous scale of businesses has been a conscious choice of the way we operate. And this allows us to provide access to the most powerful yet extremely simplified financial tools to SMEs while, at the same time, providing cutting-edge and highly scalable financial infrastructure to the established businesses,” said Razorpay Co-founder and Chief Technology Officer Shashank Kumar.

Razorpay has built India’s most advanced payments infrastructure connecting consumers with businesses irrespective of any payment instrument (100+ at last count). The company’s  growing portfolio of payment products built on the top of payments infrastructure – Payment Links, Subscription, Invoices, Payment Pages, etc. have been a critical partner in the financial journey of millions of businesses.

Digital payment

“Our latest payments product – Payment Button – has also been our fastest growing product in the history of the organisation. While we are happy with the above achievement, we are by no means satisfied. Today, 2 out of 3 businesses onboarding on Razorpay are accepting digital payments for the first time and we are committed to further strengthening the payments stack to ensure that no business is left behind in the digitisation drive,” said Razorpay Co-founder and Chief Technology Officer Shashank Kumar.

Despite the tremendous growth India is witnessing in the digital payments ecosystem, online payments still barely account for a meagre 3% of Indian economy.

“So yes, there’s  a long way to go. I strongly believe that in India’s journey towards achieving the $5 trillion GDP target by 2024, digitization of the economy and Indian businesses is not just a nice-to-have but rather a strong force multiplier,” said Razorpay Co-founder and Chief Technology Officer Shashank Kumar.

Commenting on the investment, GIC Chief Investment Officer for Private Equity Choo Yong Cheen said Razorpay has established itself as a clear leader, with its strong focus on customer experience and product innovation.

“GIC has a long track record of partnering with leading fintech companies globally and is delighted to partner with Razorpay in its journey to transform payments and banking,” said GIC Chief Investment Officer for Private Equity Choo Yong Cheen.

Transaction per day

Some of Razorpay’s clients include budget lodging decacorn Oyo, e-commerce giant Tokopedia,  top food delivery startups Zomato and Swiggy, online learning platform Byju’s, ride-hailing giant Gojek, supply chain platform Zilingo, caller ID service Truecaller,  travel ticketing firms Yatra and Goibibo, and telecom giant Airtel.

The startup expects to process about $25 billion in transactions — up five times from last year — for nearly 10 million of its customers this year. Razorpay expects RazorpayX and Razorpay Capital to account for about 35% of the startup’s revenue by the end of March next year.

Razorpay chief executive and co-founder Harshil Mathur said the startup’s payment processing service continues to be its fastest-growing business and does not need much capital to grow, so the startup will be deploying the fresh funds to expand its neo-banking offerings to include vendor payment, and expense and tax management and other features.

The startup, which aims to work with over 50 million businesses by 2025, may also acquire a few firms as it explores opportunities around inorganic expansion in the neo-banking category, said Razorpay chief executive and co-founder Harshil Mathur.

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