Razorpay raises $375 million

Fintech unicorn Razorpay has raised $375 million Series F funding from Lone Pine Capital, Alkeon Capital, and TCV, at a valuation of $7.5 billion.

Other investors, including Tiger Global, Sequoia Capital India, GIC and Y Combinator also participated in the round. Till now, Razorpay has raised a total of $741.5 million funding since its inception in 2014.

With this round, the company’s valuation has more than doubled from $3 billion in April. Talking about this jump, Harshil Mathur, CEO and co-founder, Razorpay, told BusinessLine, “The major factor is that our business scaled massively in the last two years on the back of increased digitisation, increased growth in SMB merchants, and the start-up ecosystem in general.

“The second factor that increased our valuation is we are no longer just a payments company, we have services such as banking, current account, payroll, lending, and corporate credit cards, among other things.”

Expanding presence

The company plans to use the funds to scale up its business banking suite, RazorpayX, and offer new banking solutions in 2022. Further, it plans to invest in making new acquisitions in 2022 and expand presence across the globe, starting with South-East Asia. The fintech unicorn plans to hire over 600 employees to fuel these growth plans.

Also read: Beware the over-hyped valuations of new age IPOs

Commenting on the acquisition strategy, Mathur noted that there are two objectives for the company. One is to scale up as a platform in India and the second is to expand the payments business globally. So, the acquisition decisions could be led by both product and geographical expansion.

“We feel that South-East Asia has very similar problems as India. The Philippines, Malaysia, Indonesia, and Vietnam are examples of four such countries that we would be targeting first. These are high-growth markets and a couple of years behind India, in terms of the digitisation journey. We believe the products and services that we have built and learnings that we have had would fit this ecosystem the best. If an acquisition helps us do that faster, we will look at those opportunities as well,” Mathur added.

Aiming $90 billion TPV

Razorpay has achieved $60 billion TPV (Total Payment Volume) as of early December 2021 as compared to the $15 billion TPV in 2020. The company plans to achieve $90 billion TPV by the end of 2022. Razorpay currently enables payments for over eight million businesses, including the likes of Facebook, Ola, Zomato, Swiggy, Cred, Muthoot Finance, National Pension System, Indian Oil, among others, and aims to reach 10 million businesses by 2022.

Majority of Razorpay’s revenue comes from payments, which is its largest business. While Razorpay X and Razorpay Capital have seen good traction till now, Mathur expects a lot of scale-up to happen in the next couple of years and that should diversify the company’s revenue even further.

The company has not turned profitable yet but claims to have a low burn rate and positive unit economics. Most of the company’s investment is said to be in the R&D space because Razorpay is still building and scaling its banking and lending platforms. “As the platform scales, and as our R&D expense stabilises, that’s the point at which the company should turn profitable. That’s why our IPO timeline is at least two to three years away,” Mathur added.