Razorpay, on 19 April 2021, announced that they have raised a funding of $160 million in their Series E funding round, gaining a total valuation of $3 billion. The Bengaluru-based fintech company is India’s first Y Combinator-backed startup to achieve unicorn status, having tripled its valuation in less than six months.
Razorpay was founded in 2014 by IIT graduates Harshil Mathur and Shashank Kumar as a payment gateway designed for startups and SMEs. Today, they accept, process and disburse money online with their SME lending arm, Razorpay Capital.
Recently, they also launched the neo-banking platform RazorpayX to issue corporate credit cards and offer working capital for businesses.
Since Stripe (a US giant providing the same services) is less relevant in the Indian picture, Razorpay became the market leader and now plans to recreate its success in Southeast Asian markets.
Let’s look at how this company developed so fast and what their increased valuation means for investors.
What Went Down in the Series E Funding Round?
The investment round was co-led by existing investors Sequoia Capital India and GIC, Singapore’s sovereign wealth fund.
Other investors included Tiger Global, Ribbit Capital and Matrix Partners. These investors valued the Indian startup at $3 billion, up from the $1 billion valuation in the Series D funding round held in October last year.
With the new funding, Razorpay has raised a total of $366.5 million in investments since it was founded!
Razorpay’s Future Plans
With the funding, Razorpay has set a wide range of goals they want to achieve.
We have discussed some of these in details below:
Expand to Southeast Asian Markets
Razorpay intends to use this funding to branch its digital payments model to other countries of South-East Asia. As many businesses face similar payment issues as in India, they plan to launch in one or two markets in the region before the end of the current year.
Launch New Products
The fintech company is looking for B2B financial SaaS startups in SME credit, taxation, accounting and account receivable and payments management.
They plan to increase their disbursal of credit from Rs. 700 crores to Rs. 1000 crores per month within 2021. They are already in talks with several small and mid-size companies for acquisitions using the new capital.
Meeting their Capital Requirements
Razorpay’s lending is mainly focused on meeting the funding requirements for many small businesses. With more than 5 million businesses already using their platform, they plan to grow their lending capacity further and grow their customer base.
Additionally, they plan to expand their business and hire around 600 employees.
Since its start seven years ago as a payments provider, Razorpay has come a long way, tripling its valuation in just the last six months. With a rise in digital payments in recent times, they have managed to make substantial profits and scaled up rapidly.
Their current TPV (Total Payment Volume) exceeds $40 billion, helping over 5 million businesses, including Facebook, Ola, Zomato, Cred, Airtel, Facebook etc., and aims to reach over 200 million customers by 2021.
Frequently Asked Questions
- What are the services provided by Razorpay?
Razorpay provides converged payment solutions. The company also extends funding for SMEs (Small and Medium Enterprises) and startups with loan duration ranging from three to six months.
- What additional value-added services does Razorpay provide?
In addition to payment gateway and funding, Razorpay offers the following services:
- GST invoicing
- Designing/creating websites
- Managing subscriptions
- Automated vendor payments
- Real-time reconciliation
- Where can I use Razorpay to pay for products/services?
Razorpay supports over 100 payment methods, some of which are available by default, while others need special approvals. Some of the supported payment methods are:
- Debit card
- Credit card
- Cardless EMI
It also supports payment wallets like Airtel Money, JioMoney, PhonePe, PayPal, Amazon Pay and others.