Jaipur-based Razorpay Software Pvt Ltd, an online payment startup, has raised $9 million (Rs 59 crore) in Series A funding led by Tiger Global with participation from Matrix Partners.
The company plans to use the funds to scale up its product, build a strong team and to further power its strategic forays into the online payments industry, Harshil Mathur, co-founder of Razorpay said.
"We believe that the online payments infrastructure in India has not developed at the same pace as the rest of the e-commerce and m-commerce eco-system," said Mathur. "The fact that we have been backed by marquee investors, e-commerce entrepreneurs with amazing track records and other leaders in the payments eco-system has reinforced our belief that the Indian payment space was in much need of a technology-focused solution."
Razorpay has so far raised about $2.5 million in seed funding from a number of investors and VC firms including Matrix Partners. It raised $120,000 (about Rs 74.7 lakh) from US-based startup accelerator Y Combinator in March this year. Punit Soni, Flipkart's chief product officer, hadmade a personal investment in Razorpay in May. The company has a total of 33 angel investors including Kunal Bahl and Rohit Bansal (Snapdeal founders), Abhay Singhal, Amit Gupta and Naveen Tewari (Inmobi founders), Kunal Shah and Sandeep Tandon (Freecharge founders), Bill Gajda (SVP, global head of Innovation, Visa), Jeff Huber (SVP, GoogleX), Ram Shriram (board member and an early investor in Google), Justin Kan (Y Combinator partner and Twitch founder).
The company was set up in 2013 by IIT Roorkee alumni Shashank Kumar and Harshil Mathur. Kumar has earlier worked at Microsoft, while Mathur was working at Schlumberger before launching Razorpay.
"We remain extremely positive on financial technology in India and will take multiple bets on the space," said Vikram Vaidyanathan, managing director, Matrix India.
"Digital payment is a very large opportunity and it is still early days for the industry in India," he said adding that transaction success rates are still very low and it is still difficult for smaller merchants to accept online payments. In addition, the complexities associated with the technical implementation of payment processes often result in technical glitches and increasing payment failures.
This is what Razorpay is trying to solve with its API and tools. Given that integrating a payment gateway with a new online venture involves a lot of paperwork and a long waiting period, companies can add a payment system with a few lines of code and start accepting payments instantly using Razorpay's tools. Razorpay has also introduced a transparent pricing methodology offering two options at 2 per cent and 2.5 percent for every successful transaction. It claims to support payments at 2G speeds as well.
The online payment gateway startup is focusing on small businesses, startups and institutions such as schools, colleges and training centres. Razorpay claims to have a customer base of more than 1800 companies including RoadRunnr, Lookup, Innerchef, Teen Patti Gold, LocalOye, UrbanPiper, Chai Point and Sattviko.
Razorpay competes with well-funded players such as Citrus, CCAvenue and MobiKwik in India.