Funding alert- A giant unicorn Razorpay announced a funding of USD 375 million. What an amazing piece of news it is
Let us talk about funding and unicorns. Funding is the way, a method to infuse cash into the business. Talking about unicorns, it is a startup whose value is more than USD 1 billion. It is through various rounds of funding that a startup increases its value and eventually it becomes a unicorn, then a decacorn, and then a hectocorn.
Talking about the difference between a unicorn startup, a decacorn, and a hectocorn startup, a unicorn startup is the one the value of which is more than USD 1 billion. A decacorn startup is the one the value of which is more than USD 10 billion. A hectocorn startup is the one the value of which is more than USD 100 billion.
These different stages are like various milestones which a startup covers in the course of its lifetime, but it is not always necessary that every startup covers each of these milestones or even single. But what we know is that the primary source to push the startups towards these milestones is the funding.
There are many investors out there who keep a hunt on various startups that are functioning around. They study their businesses, their goals, their future plans, analyze and predict their future, and then invest accordingly.
Some of them like to have a share in the profits and the earnings of the startup, while others want a share in the equity of the startup. Some even want a say in the controlling rights and decision-making of the startup. Every investor has a different requirement and a startup has to comply with them in order to work efficiently and successfully with the investor.
Talking about the economic situation, we all know that the year 2020 was like a black hole in the economic history of the country and the world. The world was facing a serious lockdown which was imposed because of the spread of the deadly coronavirus which was then declared a pandemic.
There were no customers on the road out to buy products and avail services. Customers were just demanding the basic necessity goods and medical stuff. The physical outlets were not being operated and because of this, many shops and businesses were unfortunately closed.
One lesson which we all have learned from COVID 19 is that to operate in an unpredictable world, to carry on the business successfully in a world that is full of so many uncertainties, we need the help of technology.
Businesses need to have an online platform to conduct their businesses. If they have this, then there is this surety that if any other pandemic like this comes into this world, such business will be able to operate and will hopefully not lose its customers.
Announcement of funding of a startup
The startup, Razorpay, has raised a funding of USD 375 million, as announced on December 20, 2021. This round of funding was the Series F round of funding and was led by Lone Pine Capital, Alkeon Capital, and TCV. The other participants of this round of funding were Tiger Global, Sequoia Capital, GIC, and Y Combinator.
After this round of funding, the value of the startup has come up to USD 7.5 billion. The last valuation of the startup was at USD 3 billion in April 2021, and now it has more than doubled.
The startup plans to utilize the funds raised in becoming a full-stack financial solutions firm, as it is planning to make investments in its neo-banking platform. The startup also plans to invest some portion of the funds in increasing and fueling its acquisitions, making its entry into the overseas market, and growing its payment gateway business.
The startup has plans to keep its focus on the expansion of its products offerings. It is also planning to hire more than 600 people to increase and expand its growth in India and Southeast Asia.
Initially, this round of planning was planned for USD 250 million, which would have valued the startup around USD 6-6.5 billion. But then the investors gained interest in core business and the neo banking platform of the startup, which increased the funding to USD 375 million.
The startup post this round of funding has raised USD 741.5 million in funding and has become one of the most valuable startups in the country and the most valuable fintech startup in India.
About the startup which has received funding
The startup, Razorpay, was started in the year 2013 by the alumni of IIT Roorkee- Harshil Mathur and Shashank Kumar and has its headquarters in Bengaluru. The startup is said to have the most innovative and popular payment gateways in the country. The startup is engaged in accepting, processing, and disbursing money to small businesses and enterprises.
The startup also conducts its operations as a neo-banking platform, which helps in offering credit cards and working capital to the business. The platform of the startup also serves as an international payment gateway that gives support to more than 90 currencies.
Some of the products and services offered by the startup are providing assistance to the businesses in collecting tax and compliance disbursements, generating payment links that can be shared through email or instant messaging services, subscription plans with automated recurring transactions on different payment modes, and automatic reuniting of the incoming transactions using virtual accounts and UPI IDs. The subsidiaries of the startup are TERA Finlabs, Opfin Software Private Limited, and ThirdWatch Data Pvt Ltd.
The startup has gained immediate growth in the lockdown when there was a sudden increase in the number of digital payments made. The startup processes around USD 60 billion in transactions every year and has more than 8 million businesses that are using this platform.
Some of the big names in the client list of the startup are- Facebook, Swiggy, Cred, National Pension System, and Indian Oil. One of the important points which need to be noted is that this year, around 42 startups have turned into unicorns in India, and out of the 34 startups use the platform Razorpay.
Talking about how this business idea came into mind, the founders met at IIT Roorkee, when the small businesses in the country were facing serious problems and challenges in accepting payments through digital modes while the existing payment system was posing inefficient in meeting the needs and the demands of the present-day business.
The co-founders had a great challenge and struggled a lot when they had to convince the banks to work with them. The talks during that time were too slow and they felt helpless in explaining to the investors the challenge again and again.
But one thing which has remained constant is to never stop reinventing. But later, everything went on to be good for the startup. They now have launched a new feature that is engaged in saving the information of the customers, which is the password, card details, addresses, and other required details.
This is done when the customer uses the platform for the first time and then prefills the details when the same customer visits again. The startup is getting ready to become ready for an IPO, but it won’t be looking to the public markets for at least two and a half years.
About Lone Pine Capital
Founded in the year 1997, Lone Pine Capital is an investment advisor and a hedge fund that has its headquarters in Greenwich, Connecticut. The investment fund has offered its services to pooled investment vehicles, pensions, and profit-sharing vehicles. It also has its investments in the public equity markets across the globe. As of March 31, 2021, Lone Pine Capital had around USD 36 billion under management. It has its offices in London, New York, and San Francisco.
About Alkeon Capital
It has been two decades since Alkeon Capital has been investing in people and innovation. It has its offices in New York, Hong Kong, and San Francisco.
About TCV
TCV partners with CEOs and partners with founders of public and private growth-stage technology companies as they strive to achieve market leadership. It provides management teams with data-driven insights, sector enterprise, access to world-class talent, and connections with category leaders.
It takes a long-term perspective, committing sustainable capital, time, and internal resources to support and partner with the companies on their journeys. It was founded in the year 1995 and has more than USD 24 billion assets under management. It has its offices in London, New York, and Menlo Park.
What has been said about the deal?
Harshil Mathur made a statement saying that the payment business of the startup continues to grow and is getting stronger. In the last one and a half years, the startup has been able to prove its thesis on neo banking and lending.
Deepak Ravichandran, who is a general partner at Alkeon Capital commented saying that the online payments players are rapidly increasing and growing the business in the Indian payment market, the startup, Razorpay, has continued to innovate and show new trails.
The startup is doing tremendously well. We wish the startup a piece of good luck and a bright and successful future ahead.
edited and proofread by nikita sharma
