With the new acquisition, Razorpay plans to double its monthly loan payments.



As three large fintech companies prepare for their IPO later this year, Razorpay, led by Harshil Mathur, is betting on the capabilities of its products to stay competitive. Last week, the Bangalore-based unicorn acquired artificial intelligence startup TERA Finlabs to grow its SME lending vertical, Razorpay Capital.

With the acquisition, Razorpay expects to double its monthly loan payments from the current Rs 300-400 to Rs 800-1,000 by the end of this fiscal year, co-founder Mathur said. Business line

Razorpay provides loans to small businesses that already use Razorpay’s payment and banking services. The company does not have a lending license in India and basically acts as a bridge between small businesses and banks, providing loans to small business owners who may be insolvent through the traditional bank underwriting process.

This makes loan underwriting the core offering of Razorpay Capital. A good underwriting process would mean more revenue for the company with each successful loan disbursement and repayment. So, the main reason for acquiring TERA Finlabs was to make the underwriting of Razorpay loans faster and better.


Razorpay claims 5 million small businesses use Razorpay payment services in various forms. This existing network gives them access to interesting data points for SMEs, such as what kind of customers they have, whether the company has customers across the country or just one city, the frequency of these customers, and whether the customers are using iPhone or Android. devices, among others.

“Some of this data will be useful for lending, some will not. But it takes a lot of effort to come to this conclusion. You need a team of data scientists and analysts who will look at all this data, issue specific loans, analyze payments, NPA, and then re-create that model. This is the traditional way of doing it, ”said Mathur.

With the acquisition of TERA Finlabs, Razorpay will be able to feed all this data into TERA Finlabs’ artificial intelligence model, and the algorithm will issue a credit rating for every small and medium-sized business. The AI ​​model will then continue to repeat itself depending on the success or failure of each loan. As the company makes more loans, the AI ​​model gets better.

“Making sure our risk model gets stronger over time is a very powerful addition to us. If we did it ourselves, we would have to spend a lot of time and energy to build this whole team and come up with this model of artificial intelligence. But with the acquisition, we immediately get both the team and the product, ”he added.

Funding history

Founded in 2014 by Matur and Shashank Kumar, Razorpay has raised a total of $ 366.5 million from major investors such as Tiger Global, Sequoia Capital India, Ribbit Capital, Matrix Partners and Y Combinator. It is reported that so far about 10,000 businesses have taken advantage of the company’s lending vertical.

Commenting on the upcoming IPOs of startups and their impact on Razorpay, Mathur said the entire startup ecosystem is excited about the upcoming IPOs, including Razorpay. He added that if IPOs are successful, it will ultimately boost valuation and fundraising activities for private startups. “But I don’t worry about them (Paytm, MobiKwik) as a competition, because we are a business first (B2B) company, unlike many other players. I don’t think anyone is as good at business as we are, ”he added.


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