India’s Razorpay becomes unicorn after new $100 million funding round
Razorpay is building the "Stripe for India." It is an Indian payments platform for companies who want to run their business online. The company helps businesses accept online payments via credit card, debit card, net banking and wallets from their end customers. Established in 2013, Razorpay has 4000+ merchants. US based Stripe is a $36 billion payment processor. E-commerce in India is expected to be bigger than the US in the next 5 years.
As a country with the world’s second largest population, fifth largest economy, and one of the fastest annual GDP growth rates, India is a massive market opportunity. While India is a fast-growing emerging market, many of its industries are still traditional and ripe for disruption by new technology, including payments. The digital payment market in India is expected to more than double to $135B by 2023, and digital payments transaction value is expected to grow at a 20% CAGR between 2020 and 2023.
Razorpay has significant first-mover advantage in entering the payments market in India early, as its business model involves acquiring businesses onto its payments platform. Razorpay’s merchant retention rate is very strong, at over 90% retention rate after one year for merchants with lifetime GMV greater than $100k. Razorpay’s technology is also a market leader in its space in India, offering an industry-leading payments success rate alongside features such as easy integration into a merchant’s website and app, autofill OTP on mobile devices, customizable UI, and a system that handles all validations on payments to reduce failures Razorpay has several distinct advantages that customers love, 1) it has one of the highest transaction success rates in the payments industry, 2) it is easy to set up with paperless KYC and developer-friendly API, 3) it offers 24/7 customer support service, and 4) it offers a simple pricing structure. Razorpay has had tremendous success in customer acquisition, working with small and medium businesses across India, as well as with leading companies such as Airtel, Swiggy, IRCTC, BMW, Zomato, Quikr, and Mercedes Benz.
Soma was one of the first seed investors. In 2018, Razorpay recently closed a Series B at a $100 million post-money valuation from Tiger Global and Matrix. In 2019, Razorpay closed their series C with leading investors including Ribbit Capital and Sequoia Capital India at a near $500m valuation. Soma helped introduce Razorpay to some of the biggest banks in the world including the CEO of Mastercard Ajay Banga, which resulted in an investment and partnership.