Indian payments unicorn Razorpay buys risk management startup TERA Finlabs

Razorpay Founders (L-R), Harshil Mathur & Shashank Kumar

Business payments and financial services startup Razorpay on Monday said it has acquired artificial intelligence (AI)-based risk analysis platform, TERA Finlabs, marking its third acquisition since inception.

Bengaluru-based TERA Finlabs provides risk management software, along with customized credit offerings to make lending more affordable for consumers and profitable for lenders. Razorpay will be leveraging the acquisition for its small and medium enterprise (SME)-based lending business, Razorpay Capital, which was launched in 2019.

Prior to this, Razorpay had acquired real-time fraud detection platform Thirdwatch in 2018 and payroll management software Opfin back in 2019.

In addition, TERA will provide its entire technology stack, risk management capabilities, and onboarding solutions to create and enable a credit line for Razorpay’s merchant network.

“In India, banks are wary of providing business loans to startups and new SMEs due to the risks attached to new revenue models of startups. Through our lending platform, Razorpay Capital, we have been striving to solve these cash flow challenges, making it easier for businesses to get finance and grow. The team at TERA FinLabs comes with exceptional domain knowledge in credit underwriting and risk management, as we see immense value in its core lending infrastructure capabilities,” said Harshil Mathur, chief executive officer (CEO) and co-founder, Razorpay.

In an 19 April interaction, Mathur told Mint that Razorpay Capital has ramped up its monthly credit disbursement from 300 crore to 800 crore through partners. Now, Razorpay plans to expand its reach to over 10,000 businesses in India, through credit offerings by the next year.

This year, Razorpay also raised $160 million as a part of its series E round co-led by existing investors, Singapore’s sovereign wealth fund GIC and Sequoia India. Post the round, it had tripled its valuation to $3 billion, within six months of entering India’s unicorn club.

“In the last 16 months, MSMEs have started showing rapid growth with their adoption of digital. And this has created an opportunity for significant disruptions in the lending sector—embedded Credit is one such innovation that I’m certain will transform this space. There couldn’t have been a better time than now for us to join hands with Razorpay and its technological capabilities to support the MSME segment,” said Pradeep Rathnam, co-founder and chief executive officer, TERA Finlabs.

TERA Finlabs, which was launched in 2018, is an Indian subsidiary of UK-based digital lender, GAIN Credit.

“While we are sad to see TERA Finlabs leave the GAIN Credit family, this acquisition is testament to the lending software platform that we built and, most importantly, the team at TERA that maintained a laser focus on deploying solutions that enabled profitable unit economics for ‘new to credit’ customer segments,” said Mukund Venkatesh, managing director, GAIN Credit India.

Razorpay claims that it has achieved an annual payment value of $40 billion and has witnessed a 40% growth month-on-month for digital payments powered by its platform.

Currently, the Bengaluru-based unicorn powers payments for over 8 million businesses, including the likes of Facebook, Airtel, Ola, Zomato, Swiggy, Cred, and ICICI Prudential.

It had onboarded close to 700,000 merchants over the course of 2020 alone and plans to process annual payments worth $50 billion by the end of 2021.

The article was first published on livemint.com.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.