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Razorpay sees its valuation jump over seven-fold this year, raises $375 Mn

By Tarush Bhalla

  • 20 Dec 2021

Digital payments and financial services provider, Razorpay has raised its second major round of funding this year worth $375 million as a part of its Series-F fundraise co-led by hedge and private equity firms Lone Pine Capital , Alkeon Capital and TCV.

With this fund raise, Razorpay is now valued at $7.5 billion, a seven-fold rise since the start of 2021, when the company was valued at a little over $1 billion. This makes Razorpay the most valued privately-held fintech company in India, and the second most valued Indian fintech after One97 Communications Ltd. owned Paytm. 

Existing investors including Tiger Global, Sequoia Capital India, GIC and Y Combinator also participated as a part of the round, the company said. 

With the current raise, Razorpay has mopped up a total of $741.5 million in equity investments since its inception in 2014. 

According to co-founder and chief executive officer, Harshil Mathur, Razorpay will use the funds to create and scale full-stack financial services offerings for businesses. It will also look at inorganic growth opportunities and will acquire companies in the business-to-business (B2B) software segment which are catering to micro, small and medium enterprises (MSMEs).  

The company will also double down on the direct foreign remittances space, and actively look to add new insurance offerings for businesses, apart from health insurance.

The company had first forayed into financial services through the launch of neo-banking and lending solutions, Razorpay X and Razorpay Capital, back in 2018. 

“Razorpay has seen rapid growth over the last 2-3 years. With banking and lending there is a full financial stack coming together (for Razorpay). Apart from payments there are multiple services which businesses are now using from Razorpay, and that’s giving a lot of confidence to investors. Further, we are very focussed on the B2B opportunity along with our unit economics, leading to conviction among investors on the sustainability of our growth,” said Mathur on the new fundraise, in an interview with Mint. 

“Our funding isn’t based on vanity metrics but on the revenues and potential opportunity we are creating through new forays,” added Mathur.  

The company has also invested in B2B logistics provider, Shiprocket and small business advisory platform MSMEx, till date.

Recently, in a bid to bolster its financial services play, Razorpay had launched new suit of products including ‘RazorpayX Tax Payment Suite’ to mark its entry into the business tax payments space.  

Since launch, the fintech’s financial services offerings already contribute to 30% of its overall business. Mathur declined to comment on revenues and overall profitability timeline for the startup.  

Currently, almost 25,000 businesses have subscribed to the Razorpay X offering, with the lending platform enabling ₹600 crore - ₹800 crore worth of loans every month, Mathur confirmed.  

Mint had reported on December 10 that the company now plans to foray into larger ticket size loans and launch credit-line for small businesses, next year. 

“We are delighted to back Harshil, Shashank and the entire Razorpay team. We think they are building the next-generation payments and banking platform in India, and we look forward to supporting them on their mission and future expansion. We could not be more excited to partner with this founding team,” said John Doran, general partner at TCV. 

The Bengaluru-based fintech is also eyeing at international expansion in 2022 and looks to be present in Southeast Asia by the first half of next year. 

Razorpay first entered India’s unicorn club back in October 2020, after the company raised $100 million led by GIC and Sequoia India, and was valued at a little over $1 billion.  It quickly tripled its valuation to $3 billion in six months, after raising $160 million in April, this year.  

It then raised an undisclosed amount from Salesforce Ventures, in September this year.  

The company recently claimed that it is processing total payment value worth $60 billion and powering payments for 8 million businesses on an annualised basis through its platform. The company expects this number to touch $90 billion by the end of 2022. 

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