India's Razorpay raises $100m Series D
Indian digital payments start-up Razorpay has achieved unicorn status following a $100 million Series D round led by GIC Private and Sequoia Capital India.
Ribbit Capital, Tiger Global Management, Y Combinator, and Matrix Partners also participated. The investment follows a $75 million Series C last year led by Sequoia and Ribbit and brings total capital raised to date to $206.5 million. It extends a surge in late-stage funding in the local VC ecosystem that has fuelled rapid expansion in start-ups claiming unicorn status.
Razorpay helps businesses accept payments across multiple channels, including online links, self-hosted webpages, third-party branded stores, QR codes. The company claims to have built India’s most advanced payments infrastructure connecting consumers with businesses, bringing together about 100 different payment instruments. Partners include Facebook, Google, Wikipedia, and Jio.
There is a strong focus on serving small to medium-sized enterprises (SME) and micro-enterprises. Razorpay estimates there are about 42.5 million of these companies locally and that 53% of them do not have access to digital financial tools. Two-thirds of the company’s clients are using its services to manage digital payments, invoices, and subscriptions for the first time.
The company also notes that SMEs spend around 60% of their time managing their finances, creating significant demand for digital banking services. RazorpayX, a platform launched in 2018 targeting this space, is said to have served more than 10,000 businesses in its first 12 months. As a result, Razorpay is now positioning itself as the first operational neobank to become a unicorn.
Other rollouts include a credit-line product called Cash Advance which and served more than 5,000 businesses in the past six months. Demand for SME lending options is believed to be supported in particular by the COVID-19 downturn. All the underwriting for Cash Advance to date has been done with the cash flow data that businesses generate on Razoplay’s platform.
“Despite the tremendous growth we’re witnessing in the digital payments ecosystem, online payments still barely account for a meager 3% of Indian economy,” Shashank Kumar co-founder of Razorpay, said in a statement. “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.”
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