However, the company did not disclose the financial details of the deal.
“This acquisition of TERA Finlabs is in line with Razorpay’s strategy to financially support as many MSMEs as possible through the development of core competencies in capital solutions, credit underwriting and data-driven risk management,” it said in a statement released Monday. “TERA will provide its entire technology stack, risk management capabilities and customization solutions to create and activate a credit line for the Razorpay retail chain.”
Razorpay Capital The statement said that, together with the technological capabilities, TERA Finlab will be able to serve the credit needs of more than 10,000 businesses in India by next year. The unicorn has invaded small and medium-sized business (B2B) lending with the launch of Razorpay Capital in 2019.
TERA Finlabs, the Indian subsidiary of UK digital lender GAIN Credit, is Razorpay’s third acquisition in less than three years. Razorpay acquired Thirdwatch, an artificial intelligence company that is helping to cut back-to-source fraud losses in e-commerce, in 2018 and Opfin, a payroll management software company, in 2019.
According to co-founder and CEO of Razorpay Harshil MathurIndian banks are wary of providing business loans to start-ups and new small and medium-sized enterprises (SMEs) because of the risks associated with their new revenue models. “Through our Razorpay Capital lending platform, we are committed to addressing these cash flow challenges, making it easier for businesses to fundraise and grow,” he said. “And going down that path, this acquisition fits perfectly into our vision of developing tailor-made affordable lending solutions for low-income small businesses across multiple industries so they can be digitized and disrupted.”
The TERA Finlabs team has exceptional expertise in credit underwriting and risk management, Mathur said, adding that Razorpay sees tremendous value in the capabilities of TERA Finlabs’ core lending infrastructure.
“For a long time, MSMEs were an underserved market. However, over the past 16 months, they have begun to show rapid growth with digitalization, ”said Pradeep Ratnam, Co-Founder and CEO of TERA Finlabs. “And it created the opportunity for major disruptions in the credit sector – Embedded Credit is one such innovation that I’m confident will transform this space.”
Razorpay, backed by investors such as GIC, Tiger Global, Sequoia Capital India and Mastercard Inc., has seen consistent growth of 40-45%. It has reached $ 40 billion TPV (Total Payments) and currently provides payments to over 8 million businesses. Its goal is to reach 200 million customers by 2021.