[Funding alert] Online payments provider Razorpay raises $75M in Series C round led by Ribbit Capital and Sequoia India

Bengaluru-based online payments solution provider Razorpay on Tuesday said it had raised $75 million as a part of its Series C funding, led by new investors Ribbit Capital and Sequoia India. The round also saw participation from existing investors Tiger Global Management and Y Combinator.  

Earlier, the company had raised a total of $31.5 million across Series A (2016) and Series B (2018) rounds, from 33 angel investors and a strategic investment by MasterCard. Matrix Partners had also participated in Razorpay’s last fundraise. 

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According to the founders, the company will primarily invest the new funds to scale up its new product suite, which includes neo-banking platform Razorpay X and lending arm Razorpay Capital. For this, it will develop newer technologies and hire more talent, doubling the team size to 700 individuals, by the end of this fiscal year.  

Speaking to YourStory, Harshil Mathur, CEO and Co-Founder of Razorpay, said,

“With Ribbit Capital and Sequoia India investing in this round, we get the best of both worlds. On one side is Ribbit, which is a fintech-focused investor and has invested in all the top fintech companies in the world. This gives us a strong strategic leverage and global fintech experience. And the other is Sequoia India, which has invested and built a lot of companies in the Indian payment space.”

Harshil also said Razorpay also be looking to grow through acquiring complementary businesses in the coming six months. These would essentially be technology startups that are building products for businesses in verticals of SaaS-based tools, including taxation and payrolls.   

Established in 2014 by IIT-Roorkee alumni Shashank Kumar and Harshil Mathur, Razorpay provides tech payment solutions to over 350,000 businesses across the country.

 On their investment in Razorpay, Micky Malka, Managing Partner, Ribbit Capital, added,

“The digital payments market in India is massive. We are excited to be part of a company that is building trust between consumers and retailers to enable payments to flow faster and more efficiently in India. We expect that with Razorpay’s technology and support, Indian consumers and business owners will benefit from a more comprehensive and thorough experience.”

Razorpay Capital+ Razorpay X

Currently in private Beta, the company’s neo-banking product suite Razorpay X aims to replace businesses’ banking platform by providing an overall financial ecosystem. It is working with 1,000-odd businesses and looking to add features such as commercial payroll, expense management, and other commercial credit products.

At present, the platform manages only payouts and collections. However, the founders are positive that most features mentioned will be available to businesses and startups in the next six months. 

Additionally, Razorpay is looking to making the neo-banking solution public in the coming two to three months. The company is yet to decide on the pricing of the platform. 

The startup’s lending product, Razorpay Capital, has at present reached an annual loan disbursal rate of $100 million. Harshil adds that this number is expected to reach $300 million by the end of this financial year. 

Razorpay Capital, which was launched in December last year, has partnered with various NBFCs that provide capital to Razorpay’s merchant base. With an average ticket size of Rs 15-20 lakh, the NBFCs offer business loans for an interest rate of 18 to 25 percent.  

However, Harshil said Razorpay was not looking to provide working capital from its own balance sheet. He added,

“Providing business loans from our own balance sheet is not a focus for us right now. We want to right now focus on the enablement of these loans and grow this segment faster, through origination and helping in fast repayment.”

The co-founder also stated that close to 7-10 percent of Razorpay’s 350,000 merchants have availed a loan from their platform, in one form or the other.

Talking about the fund raise, Ishaan Mittal, Principal, Sequoia Capital India Advisors, said,

“Sequoia has been an active investor in the payments space globally and every decade a multi-billion dollar company gets created. When we spoke to various merchants in India, they unanimously vouched for Razorpay’s product superiority and innovative offerings. Their strength lies in their technology, people, and organisational culture.”

Currently, 10-15 percent of Razorpay’s revenues come from non-payment business, and the company expects this to grow to 40 percent in the next two years. Further, the founders said the payments cost on the platform can be further subsidised with increase in revenues from other products and services. 

It is also looking to foray into newer verticals of lending to provide flexible credit. These include the feasibility of launching products, including a commercial credit card and a credit line to businesses. 

With clients like IRCTC, Airtel, BookMyShow, Zomato, Swiggy, Yatra, and Zerodha, among others, the payment solutions startup is looking to grow its merchant base to 450,000 by 2020.

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