SynopsisSoftBank Vision Fund is close to leading a $100-120 million funding round at Juspay, valuing the fintech startup at $400-500 million. That, when the Japanese investor is looking to diversify its holdings in India’s fintech space.
Bengaluru | Mumbai:SoftBank Vision Fund is close to leading a $100-120 million funding round at Juspay, valuing the payments technology startup at $400-500 million, people briefed on the matter said, as the Japanese investor looks to diversify its holdings in India’s fast-growing fintech industry.
SoftBank’s decision to take a brand-new bet in the e-payments markets coincides with the disappointing public market debut of Paytm, where it has been one of the largest shareholders. The proposed investment will be the largest fundraise for the nearly decade-old Bengaluru-based Juspay, which counts Accel and Wellington Management as investors.
“SoftBank may put in around $50 million with some other investors still to finalise their participation,” said one person aware of the development.
Juspay processes over four million daily online transactions, according to the company’s website.
Shift in Investment Strategy
Juspay offers payments processing technology to merchants and is also building a host of other services as more businesses go online, especially post the Covid-19 pandemic.
The company’s cofounder and COO Sheetal Lalwani and a spokesperson for SoftBank in India declined comment on ET’s queries on the developments.
SoftBank had so far stayed away from backing financial services companies in India due to its $1.6 billion exposure to Paytm—where it first invested in 2017—and holds a 16% stake post the listing of the digital payments firm. The big-ticket investment firm’s plan to invest in Juspay also marks the growing shift in the strategy for SoftBank Vision Fund II where it is willing to come in early in a startup with smaller cheques.
ET reported last week that SoftBank may also take a wager on the wider financial services sector.
“Lending is a big opportunity along with payments and allied businesses and all these collect large amounts of data. The winner in this category will be the one who can take all this data that’s been collected and transform it into some monetizable product—for example, insurance manufacturing,” Munish Varma, managing partner at SoftBank Investment Advisors, had told ET.
Juspay was founded by Vimal Kumar and Ramanathan RV in 2012. Ramanthan left the startup in 2019 and started Hyperface earlier this year. Lalwani joined Juspay in 2014 and is currently the chief operating officer of the firm. Ramanthan still holds around 21% in the Juspay, according to Tracxn, a data platform. Kumar owns close to 26% while Lalwani holds a 3% stake in the company, data from Tracxn showed.
So far, the company has raised about $27 million from investors, including $21.6 million in March 2020 at $118 million valuation, according to Tracxn.
The startup offers services like processing payments with a single integration, building merchant solutions on Unified Payments Interface (UPI), easier two-factor authentication for payments through device-based authentication, direct OTP and others. “It works as an intelligent layer on a payment gateway,” an industry executive said, explaining Juspay’s offerings. The company’s full-stack UPI merchant solution powers Amazon, Ola and Cred, company sources said.
The digital payments market has witnessed consolidation in India with a $4.7 billion mega merger of Prosus-owned fintech unit PayU and BillDesk. Razorpay is the only large-scale independent platform in the space and is in talks to raise new capital at a $6 billion valuation, ET reported recently.
The technology-focused SoftBank Vision Fund is also an investor in newly listed PB Fintech, which runs Policybazaar, an online insurance aggregator. While the One97 Communications stock closed 13.03% lower at Rs 1,360.30 on the BSE Monday, PB Fintech’s shares fell 6.60% to Rs 1,243.10 apiece.
(Originally published on Nov 23, 2021, 06:02 AM IST)
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