BharatPe Secures $108 Million, Reaching $900 Million Valuation

A potential new fintech unicorn is emerging in India. BharatPe announced on Thursday a successful funding round of $108 million, elevating the company’s valuation to $900 million. This represents a significant increase from its previous valuation of $425 million recorded last year.

Series D Funding Details

Coatue Management spearheaded the Series D funding for the New Delhi-based financial services startup. The round also saw participation from six existing investors: Ribbit Capital, Insight Partners, Steadview Capital, Beenext, Amplo, and Sequoia Capital. To date, BharatPe has raised a total of $233 million in equity, supplemented by $35 million in debt financing.

As part of this latest financial injection, the company distributed $17.17 million back to its early angel investors and employees holding stock options.

Future Growth Plans

“With a robust balance sheet exceeding US$200 million in available funds,” stated Ashneer Grover, co-founder and CEO of BharatPe, “our focus will now shift to execution.” The company aims to achieve $30 billion in Total Payment Volume (TPV) and build a loan portfolio of $700 million, specifically targeting small merchants by March 2023.

Bridging the Offline-to-Digital Gap

BharatPe provides a platform enabling offline merchants to accept digital payments and access working capital. Despite India’s position as the second-largest internet market with over 600 million users, a substantial portion of the population remains unconnected.

Many small business owners, such as those operating roadside stalls and local shops, are currently excluded from the digital economy. BharatPe addresses this by utilizing QR codes and point-of-sale (PoS) machines compatible with the government-supported Unified Payments Interface (UPI) infrastructure, fostering comfort and ease of adoption.

Current Performance and Lending Focus

Serving over 6 million merchants, BharatPe had deployed more than 50,000 PoS machines as of November last year. The platform currently processes over $123 million in monthly transactions.

While BharatPe offers free access to its universal QR codes, its primary revenue stream is derived from lending activities. Grover highlighted a tenfold growth in the company’s lending business throughout 2020.

“This expansion demonstrates the confidence small merchants and store owners have in our services,” Grover added. “We are dedicated to establishing BharatPe as India’s leading B2B financial services provider, serving as a comprehensive solution for small merchants. Merchants will always be central to our development efforts.”

Competitive Landscape and Market Dynamics

BharatPe’s rapid growth is noteworthy, particularly considering it entered a market with existing competitors. Analysts at Bank of America, in a recent report, indicated that the fintech sector doesn’t necessarily follow a “winner-takes-all” model.

The analysts suggest BharatPe benefited from being a later entrant. It was among the first to consolidate QR codes on the UPI network, providing merchants with the convenience of a single code. Competitors, such as Paytm, subsequently adopted a similar approach.

Furthermore, the report noted that BharatPe focused on leveraging the educational groundwork already laid by other fintech companies, rather than undertaking the task of merchant education independently.

Expansion Strategy

Currently operating in 75 cities across India, BharatPe intends to utilize the newly acquired funding to further broaden its reach and expand its network nationwide.