BharatPe’s $100 Million Equity Round Endeavour Amidst Leadership Changes

BharatPe In Talks To Raise Fresh Equity

Sources familiar with the matter have revealed that the New Delhi-based fintech startup, BharatPe, is currently in discussions with its existing investors to raise $100 million in a fresh equity funding round. Additionally, the company is actively seeking to bring in new investors for this funding round.

It’s worth noting that BharatPe previously secured a significant equity round in 2021, which saw the company valued at $3 billion; however, the ongoing negotiations for this round are reportedly taking place at a lower valuation compared to the previous round.

This development comes amidst a series of the company’s top-level talent departures. Notable exits include Nishant Jain, Chief Business Officer; Prashant Gagneja, Vice President of Organised Trade (mid-sized retailers); Ashish Aggarwal, Vice President in charge of user growth; Anurag Rathore, Vice President of Products; and Rahul Chauhan, former Head of Product Design.

An individual familiar with the situation commented on the ongoing discussions, stating, “There have been talks for the new capital at BharatPe, but the contours are not finalized yet, and valuation will be tricky because of its troubles as well as the broader correction in valuation.” These discussions are expected to continue for at least a couple of months.

A company spokesperson also emphasized BharatPe’s commitment to achieving profitability and preparing for an IPO, stating, “Our business is scaling well across business lines, and we are witnessing growth on all important business metrics.”

The spokesperson also highlighted that while there have been recent departures, the company’s attrition levels remain below industry standards, and they continue to attract new talent.

However, given the leadership changes and the evolving funding landscape, BharatPe may need to consider a lower valuation for this round. Sources suggested that the company might agree to a valuation of around $2 billion, providing a fresh starting point for growth.

Notably, discussions regarding the equity round have been ongoing for some time but have not yet progressed to an advanced stage, according to one source. Rajnish Kumar, former chairman of State Bank of India and current board chair at BharatPe, has been driving key changes, including fundraising efforts.

BharatPe has experienced a significant reshuffle at the top, with its co-founders Ashneer Grover and Bhavik Koladiya departing in 2022; moreover, Chief Executive Officer Suhail Sameer also stepped down in January of the current year.

To navigate these changes, BharatPe appointed Nalin Negi as CFO and interim CEO, while Pankaj Goel and Kohinoor Biswas joined as CTO and Head of Consumer Lending, respectively. Additionally, Aparna Kuppuswamy became Chief Risk Officer, and Sandeep Indurkar assumed the role of Chief Business Officer for Banking and Alliances.

BharatPe had set ambitious goals, aiming to achieve Ebitda-level profitability by March 2023 and ultimately pursue a public listing within the next two years. The company is now seeking fresh funding to support its expansion plans.

One source noted, “There has been a recovery in metrics after the clean-up at the firm across businesses and the management. The firm has set an internal target to hit operating profitability by October.”

In the fiscal year 2022, BharatPe reported a total revenue of Rs 680 crore but also incurred a net loss of Rs 5,610 crore.
BharatPe last raised equity funding in 2021, securing approximately $370 million at a valuation of $2.9 billion with the involvement of Tiger Global Management.

This new funding round also holds significance in the context of BharatPe’s commitment to Unity Small Finance Bank, where it holds a significant stake.
BharatPe recently announced the deployment of around 200,000 devices across more than 400 locations in India and aims to double its network of terminals in the next year with the introduction of a new Android-based PoS terminal.

While BharatPe was an early disruptor in the offline payment space with its aggressive deployment of QR code terminals, competitors such as Paytm and PhonePe have also entered this space, offering terminals that accept both card and UPI payments.

On a recent note, both Paytm and Pine Labs introduced payment devices capable of accepting contactless card payments and QR code-based payments.

Exit of Ex-COO Dhruv Dhanraj Bahl
Dhruv Dhanraj Bahl, the former Chief Operating Officer of BharatPe who was recently reassigned as the Chief Business Officer of the merchant lending division, departed from the company in September.

Merchant lending has been a significant revenue driver and a critical vertical for the company, and in May, BharatPe announced its acquisition of a majority stake in Mumbai-based non-banking financial company (NBFC) Trillion Loans, aiming to strengthen its lending business.

Bahl played a pivotal role in restructuring the organization following the departure of Ashneer Grover, one of the company’s founders; he had joined BharatPe in 2020 as the Head of Operations, bringing with him experience from organizations such as Airtel Payments Bank, Paytm Bank, and Fortis Healthcare.

It’s rumored that Bahl may establish an early-stage investment firm, aligning with former colleagues Suhail Sameer and Bhavik Koladiya. However, further details on his entrepreneurial pursuits remain undisclosed.

The Key Exits
The year 2022 witnessed significant changes at BharatPe, starting with the public departure of co-founder Ashneer Grover and, subsequently, Bhavik Koladiya, another co-founder and the company’s tech backbone, also left.

The year saw over a dozen exits, primarily in the tech and product segments, with senior executives like Vijay Aggarwal, Nehul Malhotra, Rajat Jain, and Geetanshu Singla departing to pursue their own ventures also the departure of Chief Executive Suhail Sameer in January of the current year marked the culmination of these changes.

Interestingly, it was reported that Koladiya, Sameer, and co-founder Shashvat Nakrani are reportedly supporting former BharatPe alumni in their entrepreneurial endeavors with angel investments.

The Last Bit, BharatPe’s pursuit of $100 million in equity funding encapsulates both the challenges and adaptability inherent in the fintech sector today.

Despite leadership changes and potential adjustments in valuation, the company remains committed to its mission of achieving profitability and preparing for an IPO.