Razorpay has raised $75 million (about Rs 525 crore) in its latest round of equity financing, led by financial technology-focused investment firm Ribbit Capital, which will see the Bengaluru-based business-to-business payment solutions company double down on its new business lines.
Marquee venture capital firm Sequoia Capital has also entered the five-year-old company’s cap table, with existing investors New York-based Tiger Global Management and Y Combinator’s Continuity Fund also participating in the Series C funding round, according to Harshil Mathur, chief executive of Razorpay.
While Mathur declined to disclose the exact valuation Razorpay commanded following the closure of the latest round of funding, people with knowledge of the matter put the figure at about $450 million.
This will be the latest investment in the broader fintech sector for Sequoia Capital, which had earlier invested in, and exited, Citrus Pay and FreeCharge, and continues to count MobiKwik as part of its portfolio.
Till date, Razorpay, which also counts Matrix Partners, MasterCard and a host of angel investors, among its list of backers, has raised about $107 million. It had last raised equity capital in a round led by Tiger Global in early 2018.
The company plans to use the proceeds on strengthening its two new business lines – neo-banking platform Razorpay X and its lending arm Razorpay Credit.
Mathur said that under Razorpay Credit, the company has seen an annual disbursal rate of $100 million. “We expect our non-payment gateway businesses to contribute an estimated 40% to our overall revenue over the next two years,” he told ET.
The CEO also said that the company will be substantially ramping up its employee count, while also scouting for potential acquisitions.
“We hope to have a headcount of about 700 by the end of the current fiscal, particularly in senior management roles, as well as undertake some buyouts over the next six months,” said Mathur.
Razorpay X is the expanded product suite launched by the company that accepts payments, manages cash flows, reconciles transactions and provides flexible payouts. The product, which is still in beta stage and has about 1,500 merchants on board, is expected to go live in the next three months.
Both business lines were launched under the company’s 2.0 strategy, which it announced in late 2017, as it looked to emerge as a converged payment solutions company that allowed its clients to handle all aspects related to the flow of money, right from the moment when the payment is initiated, to the point it is fully reconciled and disbursed.
“The digital payments market in India is massive. We are excited to be part of a company that is building trust between the consumers and the retailers to enable payments to flow faster and more efficiently in India,” Micky Malka, managing partner of Ribbit Capital, said in a statement.
Razorpay, which currently has about 350,000 merchants on its platform, is targeting increasing the number to 450,000 by 2020.
“Sequoia has been an active investor in the payments space globally and every decade a multi-billion dollar company gets created. The one thing common across these companies is their maniacal focus on great products that solve a clear customer problem,” said Ishaan Mittal, principal at Sequoia Capital. “When we spoke to various merchants in India, they unanimously vouched for Razorpay’s product superiority and innovative offerings.”