Razorpay, an online payment gateway solution, today announced its series A funding round of $9 million, led by Tiger Global along with participation from Matrix Partners. The startup accepts and validates Internet payments via credit/debit cards, net banking and popular digital wallets from the end customers in real time. It does this by providing a secure link between the merchant website, various issuing institutions, acquiring banks, and other payment networks.
Razorpay also told YourStory that their series A round came a week after they closed their seed round of $2.5 million which was led by Matrix Partners. Y Combinator and angel investors, including Kunal Bahl and Rohit Bansal (Snapdeal founders), Punit Soni (Flipkart CPO), Abhay Singhal, Amit Gupta and Naveen Tewari (Inmobi founders), Kunal Shah and Sandeep Tandon (Freecharge founders), Bill Gajda (SVP, Global Head of Innovation, Visa), Jeff Huber (SVP, GoogleX), Ram Shriram (Board member and an early investor in Google), Justin Kan (Y Combinator partner and Twitch Founder), in total 33 angel investors also participated in the seed round. This brings their total funding to $11.5 million.
The story so far
Razorpay was co-founded by Harshil Mathur and Shashank Kumar, both alumni of IIT-Roorkee. In 2014, they were working on a side project hoping to create a startup around it and got a first-hand experience of the problems in the payment gateway onboarding process, which involved a lot of paperwork, bureaucratic red tape, and other issues. The team found that the existing US-based payment systems such as Stripe were unsuitable for companies who wish to accept payments in India. So they set out to enable frictionless transactions with Razorpay.
Razorpay aims to provide an affordable and secure way for small businesses, startups and other traditional SME organizations like schools, colleges, and training centres to start accepting online payments. In March 2015, they announced that they had been accepted into YCombinator and would be undergoing three-month acceleration support and mentoring from Silicon Valley investors and mentors. Harshil told YourStory that the Y Combinator experience helped them in scaling up and also gave them clarity on how they should approach their seed funding process.
So far the startup has made good progress and claims to have over 1800+ customers, which include: RoadRunnr, Lookup, Gozefo, Innerchef, Teen Patti Gold, LocalOye, UrbanPiper, Instafeez, Neostencil, Chai Point, and Sattviko. They provide a completely online onboarding experience for merchants and easy Android & iOS SDKs integrations for mobile payments. With support for international payments, 50+ banks, popular digital wallets and a 24x7 support team, Razorpay aims to become the de facto choice for payments in India.
The market for online payments is growing rapidly in India and Harshil estimates that it has grown by 50 percent over the course of the last year. With a lot of startups coming up in India, that would need payment gateway solutions. He pegs the market size of the sector to be around $54 billion in India. Harshil said,
We believe that the online payments infrastructure in India has not developed at the same pace as the rest of the e-commerce and m-commerce eco-system. The fact that we have been backed by marquee investors, e-commerce entrepreneurs and other leaders in the payments eco-system has reinforced our belief that the Indian payment space was in much need of a technology-focused solution.
Globally, Stripe is a major player in the payment gateway space having raised $280M and two acquisitions. Currently, Razorpay directly competes with players such as PayU and Citrus Pay. Instamojo is also a player in this space but focuses more on individual payments.
Talking about the sector, Vikram Vaidyanathan, MD at Matrix Partners India, says, “Digital payments is a very large opportunity and it is still early days for the industry in India. Transaction success rates are still low and it is still difficult for smaller merchants to accept online payments. We believe in Harshil and Shashank’s vision of taking a technology-first approach. We remain extremely positive on Fin-Tech in India and will take multiple bets in the space."
Razorpay's mission is to simplify online payments in India through an easy-to-use and developer friendly payment gateway. They currently have a team of 15 and are looking to expand their tech team. With this funding round, their other focus areas include getting more banks on board and making upgrades to their platform both in terms of infrastructure and features. Shashank added,
We are building a payments infrastructure which will accelerate the future e-commerce growth in India. Our patent pending technology will greatly help in achieving higher transaction success rates and faster checkout time especially on mobile devices while making payment gateway integration as easy as embedding a few lines of code. The funding raised will help us accelerate the company’s growth.
Currently, Razorpay is focusing on capturing the Indian market but in the future they aim to enter South East Asian markets too. Harshil added, "Our technology is replicable across other emerging markets too which face similar issues."