"WEEK 19"

Oct 11 - 17

Happy Sunday! Vedica here with our weekly round-up. I'm still dealing with a week's worth of sleep deprivation thanks to work - not fun - so will get straight down to the week's round up. Our long story this week is Anmol's take on Razorpay, which has just become India's latest unicorn.

Weekly Recap

  1. Startup founders take row with Google to CCI doors: Start-ups discontent with Google seems to be getting more serious. The Competition Commission of India, the country's antitrust regulator, met with a group of startup founders including Paytm CEO, Vijay Shekhar Sharma, to understand the concerns raised by them over Google’s alleged misuse of market dominance in the country.

  2. E-commerce companies are offering new credit products to make purchases easier: E-commerce companies like Flipkart and Amazon are offering a slew of fintech and credit products to boost purchases in the coming festive sales. These include partnerships with banks for broader coverage of debit card EMIs, alliances with digital non-banking financial companies (NBFCs) for no-cost EMIs and boosting buy-now-pay-later offers.

  3. Razorpay raises a $100M Series D led by GIC & Sequoia India: Razorpay announced a fundraise of $100M from Singapore's sovereign wealth fund GIC & Sequoia India to become India's next unicorn being valued at just over $1B. The company that started as a payment gateway has now expanded into several product verticals in the fintech space including lending (Razorpay Capital) & business banking (Razorpay X).

  4. Pepper Content raises a $4.2M Series A led by Lightspeed India: Content marketplace company, Pepper Content, has announced a $4.2M Series A round led by Lightspeed India. This comes after the company raised their seed round from Titan Capital and several angels earlier this year in Feb. The company helps businesses with all sorts of content marketing needs.

  5. Investors steer clear of young startups with Chinese capital: Apparently it's getting increasingly hard for early-mid stage Indian companies with exposure to Chinese money to raise capital from global investors. This seems like a consequence of the heating of tensions between India & China.

  6. TREAD raises a $1.1M pre-seed round from several investors: A new fitness startup called TREAD has raised a $1.1M pre-seed round from several angels & micro-VC firms including Gaurav Munjal, Roman Saini, and Hemesh Singh, Sujeet Kumar, Kunal Shah, Amrish Rau, Sai Srinivas and Shubh Malhotra, Jitendra Gupta, Phanindra Sama & Better Capital, Whiteboard Capital, FirstCheque and Stanford Angel. (Certainly seems like a party round).

  7. Tata looks to pick up a 20% stake in BigBasket: One of India's largest conglomerates, the Tata Group, is looking to acquire a 20% stake in the online grocery company BigBasket. The space has seen heavy competition recently with Reliance entering the space with JioMart and the likes of Amazon also allocating capital towards grocery delivery.

  8. OkCredit explores M&A opportunities: In somewhat surprising news, OkCredit - the digital bookkeeping app has started to explore merger and acquisition opportunities. It has allegedly has had talks with Khatabook, BharatPe and Udaan already. The YC and Lightspeed backed company had raised a Series B just in September last year and still has runway. OkCredit was one of the first popular bookkeeping apps in the country, but it has fallen behind Khatabook in recent times.

Razorpay raises a $100M Series D led by GIC & Sequoia India

Razorpay - India's First Converged Payment Solution - YouTube

Razorpay just announced a fundraise of $100M from Singapore's sovereign wealth fund GIC and Sequoia India to become India's next unicorn being valued at just over $1B. The company that started as a payment gateway has now expanded into several product verticals in the fintech space including lending (Razorpay Capital) and business banking (Razorpay X)

The company was started in 2014 by Harshil Mathur & Shashank Kumar who had a hard time convincing banks to work with them in the start. The company was part of YC's Winter 2015 batch and raised a $2.6M seed round in 2015 led by Matrix Partners & a bunch of angels. Later that year, they raised a $9 Series A from Tiger Global (Lee Fixel led the investment) followed by a $20M Series B in 2018 (also led by Tiger Global). The company raised a $75M Series C co-led by Sequoia & Ribbit, and the latest round rounds up their fundraising history.

I came across Razorpay for the first time in 2015 when the company launched on Hacker News. As a CS student who went to several hackathons and very familiar with Stripe's APIs, I immediately became a fan of Razorpay- they were the first Indian company that I had come across that built their product around developers focussing on the developer experience (DX) and documentation.

I think it's fair to say that Razorpay in its early days was very inspired by Stripe - both had a core focus on the DX, were YC companies, funded by Sequoia and have Blue logos. But to call Razorpay a Stripe copy is a disservice to the company - I think Razorpay has built quite a monumental company and expects to process $25B in transactions this year for ~10M customers.

Not only has the company been successful in building India's most popular payment gateway, it's adjacent product launches and acquisitions are where I think the company will thrive in the future. The company has only made two acquisitions as of date - ThirdWatch to reduce returns and fraud for Razorpay merchants (fraud is one of the largest concerns for Indian eCommerce companies) and Opfin to help companies automate their payroll.

Payroll management fits into the company's largest push over the last year or so with RazorpayX. The company announced a business banking product called RazorpayX. With this, businesses of all sizes can manage payroll (Opfin), vendor payments, issue corporate credit cards and manage all their financial workflows. The company also launched Razorpay Capital to offer working capital loans to merchants on its platform, partnering with several NBFCs to facilitate the money movement. The company expects 35% of their revenue to come from RazorpayX and Razorpay Capital by March 2021.

The perennial question remains: "What if Stripe expands in India?" People have been asking this since Razorpay's first launch. I think Harshil's answer from their first HN post says a lot about why Stripe hasn't worked in India - "We will always have the local player advantage over Stripe. Payments is closely related to the infrastructure of the country." Stripe has been in India since 2017 but unfortunately hasn't made much progress in the country - they still don't even support UPI payments. It will also take Stripe several years to reach a significant transaction volume in India (as a percentage of their total volume processed) so it might not even be worth for the company to focus on India

And lastly, I think Razorpay has a done a great job so far of not burning a bunch of money - in FY19, the company's total losses were only ₹3 Cr ($410k) and it aims to be profitable in the next couple of years. I'm super bullish on Razorpay and think the company is going to expand on their financial products- either through acquisitions or building internally. It is well set to be the "Central Nervous System for Digital India".

A couple of other reads on Razorpay:

What we've read this week

What does Segment do? by Justin Gage

Why Facebook Can't Fix Itself by Andrew Marantz

Reliance: Gateway of India by Packy McCormick

Transitions by Ryan Caldbeck

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