Razorpay Raises $375 Mn Led by Lone Pine Capital, Alkeon Capital and TCV; Valuation Increases to $7.5 Bn

  • At $7.5 Bn, Razorpay continues to be one of India’s Most Valued FinTech Companies to have achieved the fastest increase in valuation for an Indian Unicorn
  • Aims to scale up its Neo-Banking Platform, RazorpayX, Acquire B2B SaaS companies, and Expand business into South-East Asian markets

Bengaluru, INDIA – 20 December, 2021: One of India’s fastest growing Fintech Unicorns, Razorpay, today announced its Series-F fundraise of around $375 Mn. With this funding round, the fintech major’s valuation increased to $7.5 Bn. This makes it the fastest increase in valuation for an Indian Unicorn in a year. Razorpay was valued at $1 Bn in October’20 and $3 Bn in April’21. With the Series-F round, the Fintech Major has raised a total of $740 Mn in investments since its inception in 2014.

Co-led by Lone Pine Capital, Alkeon Capital and TCV, the Series-F fundraise also received participation from existing investors like Tiger Global, Sequoia Capital India, GIC and Y Combinator. These funds raised will be invested towards Razorpay’s mission of making finance frictionless by building a full-stack financial solutions company, solving for all payment and banking needs of businesses on one platform. The company plans to use the funds to further scale up its Business Banking Suite, RazorpayX and offer new banking solutions in 2022 that will help businesses focus less on handling compliance & operations and more on growth. The full-stack financial solutions company also plans to invest in new acquisitions in 2022 and expand its presence across the globe, starting with the Southeast Asian countries.The Fintech Unicorn plans to hire over 600 employees to fuel these growth plans in India and overseas. 

Globally, digitisation is triggering fundamental changes in the finance function. Small businesses realise that they cannot afford to lose time dealing with legacy systems and processes while there is a whole new generation of fintech that can help. Razorpay believes fintech is a way for small businesses to differentiate. Razorpay’s recently launched products at FTX’21: MAGIC Checkout, RazorpayX Tax Payment Suite and Razorpay RIZE, along with the freshly raised funds will strengthen the financial infrastructure of small companies with real-time intelligent solutions to do more and disrupt more.

Commenting on creating a track record and continuing to be one of India’s most valued organisations, Harshil Mathur, CEO and Co-Founder of Razorpay says, “It’s an exciting time of change we’re living in. We’ve come a long way in these seven years, and more so since 2020, and I’m filled with immense gratitude for the company to have travelled thus far. Throughout this journey, we’re humbled and excited to have had the opportunity and trust of 8Mn partner businesses. And now moving forward, we believe we will radically change how payments and banking is done in nearly every sector of India.”

He adds, “While these freshly infused funds will be used in multiple areas, the most important one will be towards investing in building intelligent technologies that will make the lives of small businesses easier by providing them a fundamentally different experience and reducing complexity. We want them to spend less time managing compliance and operations and invest more time in creating new products, building on new ideas and thinking scale. It’s great to know that our investors across the globe have continued to put their trust in this mission. This investment will help us take financial services up a notch and serve the underserved businesses and continue to build the central nervous system of Digital India.”

Today, the company’s neo-banking platform, RazorpayX is changing the business of banking rapidly and intelligently, powering over 25,000 Indian businesses to manage their money. Apart from product expansion of RazorpayX, the company is also looking at global expansion. Geographies like Southeast Asian (SEA) countries face similar payment problems like India and Razorpay will look to leverage its leadership in building intelligent payment products and learnings to ripe markets like SEA countries. Apart from this, Razorpay also plans to use the fundraise to double down investment in acquiring B2B SaaS companies that can help scale up operations while providing the highest standards of customer experience in the country.

Shashank Kumar, CTO and Co-Founder, Razorpay said, “One of our internal values is – “Everything we do, we do for our customer.” It’s something we as a team have been practising since Day-1. Over the last seven years, we’ve tirelessly worked towards making Razorpay a technology and product company which is people-first. If there is one thing the Razorpay team has committed to doing since 2014, it is to never stop reinventing. We want to create new products and build experiences that will change the lives of millions of businesses and consumers. Over the years, the feedback we’ve received from partner businesses has been quite encouraging and assured us that we’re on the right track. With the funds raised, we want to continue delivering a payment and banking experience that businesses will take advantage of and worry less.“ 

He added,The growth of Razorpay is a testament to the enormous fintech adoption the country has witnessed. We at Razorpay are all set to create a larger dent in the fintech universe and with the help of new acquisitions and partnerships we will be able to build an A-class financial service infrastructure for India’s businesses.”

David Craver, Co-Chief Investment Officer at Lone Pine Capital said, “India’s B2B fintech sector is undergoing a period of rapid growth, and we are excited to partner with Razorpay, which has been at the forefront of creating resilient, innovative products to anticipate and address the changing needs of businesses.” He added, “Razorpay’s tenacity in building people-first technology solutions that facilitate seamless financial operations has garnered further momentum in the market. We look forward to working with Harshil, Shashank and the rest of the Razorpay team to further the company’s sustained growth and impact on this dynamic sector.”

Deepak Ravichandran, General Partner at Alkeon Capital said, “As the leading online payments player in the rapidly accelerating Indian digital payments market, Razorpay has continued to innovate and blaze new trails. With a broad set of products across payments, banking, and software that provide a seamless end-to-end experience for merchants (who have been historically underserved by legacy payment providers) and geographic expansion on the horizon, we are thrilled to be partnering with Harshil, Shashank and his team who have continued to execute on their vision. We could not be more excited for the journey ahead.”

John Doran, General Partner at TCV said, “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.”

Of the 42 companies that were crowned as unicorns in 2021 alone, Razorpay powers payments for 34 of them!  Razorpay has achieved $60 Bn TPV (Total Payment Volume) as of early December 2021. The company plans to achieve $90 Bn TPV by the end of 2022. Razorpay aims to further solidify its position as one of the largest full-stack fintech companies in the country. The company clocked over 300% YoY growth, second year in a row. Razorpay currently powers payments for over 8 Million businesses including the likes of Facebook, Ola, Zomato, Swiggy, Cred, Muthoot Finance, National Pension System, Indian Oil, among others and is all set to reach 10 million businesses by 2022.

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About Razorpay

Razorpay, a full-stack financial services company, and a recently crowned Unicorn, helps Indian businesses with comprehensive and innovative solutions built over robust technology to address the entire length and breadth of the payment and banking journey for any business. Established in 2014, the company provides technology payment solutions to over 8Mn businesses. Founded by alumni of IIT Roorkee, Shashank Kumar and Harshil Mathur, Razorpay is the second Indian company to be a part of Silicon Valley’s largest tech accelerator, Y Combinator. Marquee investors such as Lone Pine Capital, Alkeon Capital, TCV, GIC, Tiger Global, Sequoia Capital India, Ribbit Capital, Matrix Partners, Salesforce Ventures, Y Combinator and MasterCard have invested a total of $740 Mn through Series A, B, C, D, E & F funding. Around 33 angel investors have invested in Razorpay’s mission to simplify payments and banking and redefine how finance works in India.

For more information, please contact:

Hepsibah Rozario || hepsibah.rozario@razorpay.com || +91 8884913468

Katja Gagen || kgagen@tcv.com || +1 415 690 6689


Banking Evolution & Revolution—Fireside Chat with Jacqueline (Jackie) Reses, Head of Square Capital, and David Yuan, GP at TCV

We believe that many SMB and vertical SaaS companies are starting to exhibit platform characteristics.  Some of these companies are beginning to build consumer and supplier networks that are expanding the SaaS model dramatically. 

We recently brought the pioneers of these new SaaS models together and were fortunate to have Jackie Reses share her thoughts on the emerging lending opportunity for SaaS. Witty, wise, and incredibly insightful, Jackie is a total superwoman. In addition to running Square Capital, Jackie serves on the board of the San Francisco Federal Reserve Bank and is a former board member of Alibaba. She also worked in private equity for 20 years.

Dave: Great to talk to you, Jackie! Is it true you started your career on the dark side, as an investor?

Jackie: Yes, I worked in private equity for 20 years. I just kept going forward. I had a mid-life crisis without the crisis, as I like to call it. I ran parts of a large private equity firm, but I much prefer being on the operating side. I still invest and that’s my fun side project. But I love working at Square. It’s a really fun place to be.

Dave: Square is certainly on a tear. Maybe we could start and just talk a little bit about that. Very few companies reach your scale, and then accelerate. But that’s what you’ve done at Square.

Jackie: Yeah, it’s exciting. We have driven strong revenue growth at scale since we went public.  It’s interesting to think back to when Square was starting with payments and building on that. That really was the catalyst for what we should build in an ecosystem in a very different way. Since then, we have built ancillary products around payments like point of sale, loyalty, employee engagement, lending, and payroll around an ecosystem.

Dave: You mentioned that every one of your products is an onboarding product. You don’t think of “land and then expand,” it’s all onboarding, it’s all “land”?

Jackie: Like lending we consider it to be a product that will onboard into Square. We have two parts of our lending business. One is the business lending, and that’s something we launched with Square sellers, and we extended it outside of Square in the United States.

And then we also have an Installments product which has been incredible. Installments is a consumer lending product that can have a customer pay for large purchases with installments, which provides the buyer with payment flexibility.

That said, I think about Square Capital first. My job is to grow Square Capital. That should stand on its own. The product itself has to be remarkable.

When we launch a new Square Capital product, we launch it because I think about all inbound customers into Square for lending and then create a cycle throughout our ecosystem to evolve as they learn about other products.

Dave: You talked about Square and the multiple product lines and high rate of self-onboarding. How core is self-serve to Square?

Jackie: It’s the way we start on every product. They have to be self-serve, elegant and fast as a means to make them remarkable. Driving your thought process around self-serve forces you to create simplicity and ease of use. 

Dave: You’ve described several different businesses that have arguably very different DNA. SMB, point of sale, consumer cash, credit, etc. How does that work in the same organization?

Jackie: I think lending is the one that everyone has the hardest time with. If anyone thinks that payments are regulated, lending is like 10x that.

Managing risk and the dynamics of a high-growth company are very different disciplines. I think that’s probably the hardest thing I deal with as an executive at Square. The dynamics of credit risk can really hurt sellers, and they can hurt us, and they can hurt our ecosystem of investors.

And so top line growth on a lending business is not the goal. I think you have to have a very different level of responsibility and a discipline that is almost the inverse to payments, where topline revenue growth can be the goal.  

You need to remain focused on what’s good for the end merchant. There are some lenders out there that have a goal of maximizing loan size. I think that’s irresponsible. We try to maximize a loan that helps sellers grow. That’s a very different mindset. We are also very fortunate that we don’t have channel or customer acquisition costs which helps us take a pretty responsible approach.

Dave:  Right. There is a real trade-off between growth, risk, and merchant health. How do you measure your success, what are the metrics you report on?

Jackie: It’s originations and different views of defaults. We could double our loans if we wanted to tomorrow. Yet, you double it at the loss of small businesses who can’t afford the debt that you’re giving up. The one limitation of credit is that there is a natural debt capacity of what these companies can afford based on their cash flows. And you’ve got to make sure you’re really good at how to predict that and then manage it so you’re not putting companies at risk.

Dave: Let’s talk about the risk side. Companies in an earlier phase want to learn. They want to train their algorithms. So in some ways having defaults is actually a data point to trigger. How do you get through that initial learning period?

Jackie: We do the same thing. Although I have to say that many refer to models which really aren’t machine learning models – the data set is too small to be driven off of machine learning. 

It’s hard to train models when you have a really narrow data set. Many lenders use basic heuristics to limit who they lend to.  That is not a machine learning model – its addition and subtraction in a ton of excel. 

Loan losses also can be instructive for model training, so you need to be willing to invest in your weakest credits in order to learn.  If you look at the public fintech lending companies, very few of them have actually been successful at long term customer acquisition and default profiling. It’s a hard, capital intense business and takes years to do. We think of lending as a platform to help our sellers grow.  The regulatory environment and the amount of capital required to do this is just really high.

Dave: What about payments data?

Jackie: The payments data is super useful but you have the fidelity of moment to moment transactional changes.  Matching risk, credit, behavioral and bank data together with payments is very powerful!

Additionally, for model training, its instructive to look at why sellers de-activate off of our system. Insights around business failure and fraud can also be a helpful part of the equation. 

Dave: You mentioned just how different being a lender is than the rest of Square and orientation around growth, versus risk management. How did you actually set it up so that it was able to perform this task culturally? Did you wall it off?

Jackie Reses: I thought about it every day. To be honest I think we’re very unique and lucky at Square because the way we are owned and run is with a long-term orientation, which most public companies are not.

Being focused on the long term, you can set up the ethos of what you need it to be. Because it’s the right answer for that kind of business long term. But we talk about it every day because it’s really easy to lend money, and it’s really hard to get it back.

And then the compliance is huge. I have everything documented in a way that’s profoundly non-tech. And that’s in a product that’s highly automated. We practically have a lean lending team. And then I have to have all these policies and reviews and committees. It’s the only product at Square that has a board committee.

We’re growing fast, but you got to be really strict about it and stand up if you see issues.

Dave: Let’s switch gears a little bit. I’d love to take advantage of your experience with Alibaba. The dynamics in China seem totally different.

Jackie: Totally different. QR code based, facial recognition based, sound based.

Dave: Do you think there’s a future state in China where you do have to worry about some sort of disaggregation or actually consolidation of the payment infrastructure?

Jackie: The dynamics in China are really different because there was an escrow system that existed 10 years ago in China because there were no logistics, and there was no trust. If you were going to order a package in China, you never knew whether you were going to get it, how you were going to get it, because neither system existed around credit and shipping. They just didn’t exist. And so the idea of an escrow system was the genesis of how Alipay got started. It really became a predominant payment rail. And it did so in an environment where it matched its sister company which controls 60 percent of the eCommerce in China. So those dynamics are really different than the dynamics that exist in the United States today, where the proliferation of credit options is extraordinary. In the U.S., there is no logistics issue with the way we think about freight and the multiple players. You can trust that if you send a package by FedEx it will actually show up.

All these dynamics of eCommerce that we take for granted in the United States are really the reason why there’s such a tight band of competition in China. I think WeChat is interesting. WeChat evolved after QQ started. Tencent built an unbelievable business and their second version of it has just been extraordinary because it’s become like a full utility app for everyone in China.

So now you have these two non-bank players in China competing with one another. Neither have really been able to get into the United States. I don’t know whether you noticed, but you’ll start to see Alipay showing up at a register. Go ask how many transactions have actually happened at that counter. There’s the notion of these Chinese tourists that are coming here but they use UnionPay.

That said, there’s not a lot of demand for it at this point in the United States. I think they’ll have a better time in Southeast Asia where they’re more connected and Japan, because they’ve got the Softbank connectivity that still owns a huge portion of Alibaba and Alipay. I just think it will be much harder in the United States.

David Yuan: Well Jackie, that was incredible! Thanks so much for taking the time to share your views.

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