The Fintech Unicorn Founders The Rise of Razorpay

By Punita Sabharwal

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Harshil Mathur and Shashank Kumar (Founders of Razorpay) always wanted to build something which would solve a core problem that the masses face. In 2014, they were working on a crowdfunding portal for India but soon realized that most of the online payment gateway solutions were extremely cumbersome to get started on, especially for startups and SMEs. When they observed and witnessed this poor state of the online payment industry in India, they understood that they have a larger and more important issue to solve – to democratize payments for Indian businesses, particularly the underserved economy, SMEs. And that is how Razorpay was founded in 2014, as India's first payment gateway built for startups and creating a platform for a simple, affordable and secure way for businesses to accept payments online. Six years to now, Razorpay has evolved from being a payment gateway to a full-stack financial services company with offerings such as Razorpay Capital, and RazorpayX.

Razorpay Capital is a lending platform, designed to support SMEs with instant and easy access to lenders. Based on the business's transaction history with Razorpay, the company facilitates credit. The platform currently offers a loan of ticket size varying from 5 Lakhs to 1 Cr. RazorpayX is a neo-banking platform. The solution is designed to simplify banking for businesses, accelerate and supercharge every aspect of a business's financial operations — from accepting payments and managing cash flow to reconciling transactions and flexible payouts. The neo banking arm of fintech giant, RazorpayX has hit a TPV (Total Payment Volume) of USD 3 bn annualized. The company now provides technology payment solutions to over 1,000,000 businesses.

In the last six years, the company has powered digital payments for more than 5Mn small and large businesses such as Facebook, Indigo, BSE, Airtel, Reliance, SpiceJet, Aditya Birla, and Oyo, among others. The company has been working towards enabling the adoption of digital payments especially in traditional cash-rich sectors such as education, insurance, and mutual funds, among others. The company has clocked in a healthy growth rate of 40-45% healthy month on month growth in the last 6 months of Covid-19 and is geared up to increase the number of businesses to 15 Mn by 2021. This full-stack financial services company expects a 4x growth in its revenue in this year, 2021. Just like every other startup's journey, Razorpay's journey has also been filled with ups and downs but it was all a journey of perseverance that has brought them and the company thus far, reaping fruits of success. In 2013, when Harshil and Shashank decided to build something new for the fintech ecosystem without having any knowledge or a qualified background in finance. One of their first steps towards building Razorpay was working with banks and financial institutions, but soon they realized the journey wasn't going to be easy because there were many complications that were lying ahead of the road. They met over 100 bankers who didn't believe in them or the idea as they were primarily seen as "college graduates'. But they never gave up until one bank helped them go live and from serving five customers out of a small office in Jaipur, Razorpay today serves over 5Mn businesses across India.

Soon in the year 2016 when the market had gone really weak in India, Razorpay founders felt the journey isn't going to be smooth as they thought because, at that point in time, VC funding was also drying up, businesses weren't scaling up much. But there was a hope in the unseen when one of the investors went ahead and offered Razorpay a series B term sheet and said, "while the markets are doing bad, we firmly believe that your business will do really well as the market starts recovering. And we wanted to offer you a series B term sheet". And for Razorpay that wasn't about the money but the belief that there's an investor and board member who believes in the journey as well. With total fundraising of USD 206.5 million from marquee investors along with 33 angel investors, the fintech startup achieved a billion-dollar valuation in the year 2020.

When asked about the road to profitability, Mathur says, "Razorpay expects to attain break-even in the forthcoming financial year." A key area of growth for Razorpay in 2021 is Business Banking, and via its Neo-banking arm, RazorpayX, the company has been disbursing working capital of 250Cr per month and aims to increase it to 500Cr monthly in 2021.




SERIES A: USD 11.5 million (Tiger Global, Matrix Partners)

SERIES B: USD 20 million (Tiger Global and Y Combinator along with participation from Matrix Partners)

SERIES C: USD 75 million (Ribbit Capital, Sequoia Capital India)

SERIES D: USD 100 million (GIC, Sequoia Capital India, Ribbit Capital, Tiger Global, Y Combinator and Matrix Partners)

(This article was first published in the February 2021 issue of Entrepreneur Magazine. To subscribe, click here)

Punita Sabharwal

Entrepreneur Staff

Deputy Editor, Entrepreneur India Magazine

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