Paytm has secured $1 billion in its new financing round taking its valuation to $16 billion. The latest funding led by US-based asset management firm T Rowe Price has cemented Vijay Shekhar Sharma-led company's position as India's most-valued startup. This is the largest amount raised by an Indian startup this year.
T Rowe Price, along with Discovery Capital and D1 Capital put in about $400 million, while existing investors SoftBank and Ant Financial put in $200 million and $400 million respectively.
The company plans to pump in the money on merchant expansion in both online and offline modes as well as to make an aggressive push in the financial services business. Vijay Shekhar Sharma told Times of India that lending, insurance and new-age banking would be the new focus for the company. "We are in the final process of applying for a general insurance licence. On the merchants' side, we have 15 million of them and want to add 20 million more in the next two years," he stated. The company will also invest Rs 10,000 crore in the next three years to expand its reach in the rural areas. The Paytm chief stated that some of the businesses in Paytm including payments and ticketing are in the process of breaking even.
Sharma also said that the company would focus on its payments gateway business. "We are a more mature, leaner and thinner organisation now. We have reduced our burn by about 35-40 per cent in the last six months," Sharma told the daily.
In the previous round, Paytm had raised $300 million from Warren Buffett's Berkshire Hathaway in 2018. The company was valued at $10 billion then. In the year since, the company has cashed out employee stock options. This is the first primary funding round since Berkshire Hathaway's investment.
As for competition, Sharma was confident that they are miles ahead of Paytm's rivals GooglePay, Amazon Pay and PhonePe. He added that these platforms have been spending billions of dollars in the last two-three years but couldn't even "touch" their payments business. "We have been successful in not just protecting but increasing our market leadership," he stated.