Paytm has further cemented its place as India’s most valuable startup.
Paytm has raised $1 billion (Rs. 7000 crore) in its Series G funding round led by US asset manager T Rowe Price and existing investors Ant Financials and Softbank. Ant Financials, which is owned by Alibaba, contributed $400 million, while Softbank put in $200 million from its Vision Fund. The round valued Paytm at $16 billion, slightly higher than the $15 billion valuation the company had claimed in August this year.
Paytm CEO Vijay Shekhar Sharma said the firm will use the fresh capital to court merchants as the company looks to expand its presence among small and medium-sized businesses. “Today, we open next chapter in Paytm’s journey of India’s financial inclusion. We commit to invest additional ₹10,000 crore to serve financially unserved / underserved,” he tweeted after the news of the funding became public.
Today, we open next chapter in Paytm’s journey of India’s financial inclusion. We commit to invest additional ₹10,000 crore to serve financially unserved / underserved.
Thank you for your guidance and support.
Dedicating it with my school time favorite Jai Shankar Prasad poem:
— Vijay Shekhar (@vijayshekhar) November 25, 2019
While Paytm claims that it’ll need the money to grow its business, in reality it might just need it to compete with deep-pocketed competitors. Google Pay and Walmart-owned PhonePe have made rapid strides in the payments business, and as far as UPI payments are concerned, have left Paytm way behind. Google Pay and PhonePe now do twice as many UPI transactions as Paytm, which had been India’s original payments app that had gone mainstream. Both companies have used generous rewards and cashbacks to draw in customers, and Paytm, even though it has raised $3.3 billion to date, has struggled to compete.
It hasn’t helped that Paytm’s ambitious bets aren’t quite working out. Paytm’s Payment Bank hasn’t quite made the impact that it had hoped, and was even prevented by the RBI from adding new customers after it supposedly didn’t properly store user data. Paytm Mall, too, has seen its traffic fall 90 percent after it stopped its cashbacks, and is now an also-ran in the e-commerce space dominated by Flipkart and Amazon. Its more experimental offerings, like games, live TV within its app, a cloud service, and even an integration with Twitter are yet to produce any discernible results. Paytm’s losses are ballooning too, and the company lost nearly Rs. 4000 crore last year.
And perhaps most tellingly, Paytm’s seen a senior executive exodus in recent times. Paytm Senior Vice President Deepak Abbott had put down his papers last month, and was followed by Nitin Misra, who was also a Senior VP . Earlier this month, Paytm’s head of growth and Assistant Vice President Ankit Gera quit, and was followed by Sujit Mishra and Nitin Sagar, who also put down their papers.
Paytm, though, does have quite a few things going for it. It is India’s most valuable startup, and with its new $1 billion fund infusion, is well capitalized to take on incumbents. It also has a thriving business, whose equivalent UPI apps like Google Pay and PhonePe don’t quite have. But Paytm will have to make sure it plays its cards well — there are multinational giants like Google, Amazon and Walmart eyeing its territory, and like Softbank has shown with WeWork, the patience of venture capital investors isn’t in infinite supply.