While BharatPe’s massive Series E round may have secured the most headlines last week, CyberTech ventures and InsurTech companies bagged the most capital injections.
India-based merchant payment platform BharatPe dominated the headlines last week after securing an oversubscribed $370m investment round and a $2.85bn valuation. This means that it is now part of an exclusive club of FinTech startups that can claim to be unicorns. BharatPe, which counts Coatue, Ribbit Capital and Sequoia Capital India among its existing investors, operates an eponymous service to help offline merchants accept digital payments and secure working capital. To make these merchants comfortable with accepting digital payments, BharatPe relies on QR codes and point of sale machines that support government-backed UPI payments infrastructure.
Apart from BharatPe, other PayTech startups which reeled in millions in investment last week include Rapyd’s massive $300m round, VNLIFE, Yaydoo, Wildfire Systems, Ritmo, WapiPay Reserve Trust, CoreChain and Tabby.
It’s hardly surprising that more startups offering QR-based payments methods are now mushrooming across the country as the Reserve Bank of India ruled that payments companies would have to shift to interoperable QR codes by March 31, 2022. More recently, India launched e-RUPI, an electronic voucher promoting digital payment solutions, a QR code or SMS string-based e-voucher, which is delivered to the mobile of the beneficiaries. The users of this seamless one-time payment mechanism will be able to redeem the voucher without a card, digital payments app, or internet banking access at the service provider. Any government agency and corporation can generate e-RUPI vouchers via their partner banks.
Moreover, given that the global economy is looking for virtual payments, remittances and no contact POS due to the Covid-19 pandemic, investors are taking any additional risks by making new large investments in PayTech firms. The global QR code payments are expected to reach $2.21trn value this year and then continue rising to $2.71trn by 2025, according to AksjeBloggen.com. As the world’s largest QR code payments market, the APAC region is expected to generate 85% of that value. Additionally, the top ten PayTech deals completed globally in 2020 raised in aggregate nearly $5.3bn making up 44.5% of the overall investment in the sector during the year, with Gojek, PhonePe and Swedish startup Klarna leading the sector. Clearly, the sector is poised to go from strength to strength.
Moving on, this week also saw several cybersecurity and digital identity companies raise capital – as what has become a common refrain in these roundups – highlighting the need for compliance and security solutions on the troubling days of Covid-19. The pandemic has increased the activity of fraudsters trying to take advantage of compromised systems. With financial service providers being entrusted with personally identifiable information, the demand for cybersecurity continues to evolve, making it a top priority for companies to beef up their cyber defences. Companies like JP Morgan Chase has planned to invest $600m per year to strengthen its cybersecurity strategies.
The last week saw the continuing trend of cybersecurity companies raising money with Venari Security, Nozomi Networks, Finite State, seedata.io and SentiLink all adding additional capital to their coffers. The news comes after RegTech Analyst reported that five out of the top ten RegTech companies which bagged investment in H1 2021 were in the cybersecurity sub-sector. In Q1 2021, the CyberTech sector already saw $4.1bn being pumped in driven by 17 deals of $100m or more, compared to just three such transactions recorded in Q1 2020, according to FinTech Global’s research. Unsurprisingly, the list of CyberTech unicorns is growing rapidly with ten new startups joining the coveted billion-dollar club in 2021.
Another recurring theme through the coronavirus pandemic has been how the crisis bolstered the insurance segment of the FinTech industry. The InsurTech sector has often been put forward as a sector particularly prone to take advantage of the crisis. And with Flood Insurance, Amplify and Naked being among the InsurTech companies to have raised capital last week, there seems to be some hard cash backing up that assessment.
With all that out of the way, we hope that taking a closer look at the 34 funding rounds that caught our eyes over the past seven days could provide some clues on where the sector is headed.
BharatPe becomes India’s newest unicorn after $370m round
BharatPe raised $370m in funding, led by Tiger Global that has pushed the merchant payment and lending service provider’s post-money valuation to $2.85bn. The series E round included a secondary component of $20m. The latest round attracted new investors Dragoneer Investment Group and Steadfast Capital alongside the return of five out of the seven existing institutional investors – Coatue Management, Insight Partners, Sequoia Growth, Ribbit Capital and Amplo.
The startup developed a QR code-based payments service using India’s UPI infrastructure to help offline merchants accept electronic payments. It also provides working capital to small firms and this year launched its own card acceptance terminal, with more than 50,000 machines already deployed. The company currently serves more than seven million merchants and has disbursed close to $300m in loans.
Rapyd rakes in $300m
UK-based Fintech as a Service company Rapyd raised $300m in Series E funding. The round was led by Target Global with participation from new investors including funds managed by Fidelity Management and Research Company, Altimeter Capital, Whale Rock Capital, BlackRock Funds, and Dragoneer.
The company intends to use the funds to accelerate growth through a combination of organic growth, acquisitions, and strategic investments. The financing comes shortly after Rapyd’s acquisition of Valitor, a European payments and card issuing company, for $100m, and the launch of Rapyd Ventures, the company’s venture arm.
VNLIFE banks $250m in Series B funding
Vietnam-based payments provider VNLIFE raised $250m in funding. The round was led by General Atlantic and Dragoneer Investment Group, with participation from PayPal Ventures, EDBI, GIC and SoftBank Vision Fund 1.
The company intends to use the funds to accelerate the growth of its existing businesses and support the development of new platforms and technologies. Vnlife provides technology solutions being offered by its core financial technology subsidiary, Vietnam Payment Solution JSC, to over 40 banks across the country. The company also operates VNPAY-QR, an interoperable cashless payment network, with 22 million users and over 150,000 merchants.
Xepelin hauls in $230m
Chilean startup Xepelin, which has created a financial services platform for SMEs in Latin America, has secured $30m in equity and $200m in credit facilities.
LatAm venture fund Kaszek Ventures led the equity portion of the financing, which also included participation from partners of DST Global and a slew of other firms and founders/angel investors. LatAm- and US-based asset managers and hedge funds — including Chilean pension funds — provided the credit facilities.
Xepelin is built on a SaaS model designed to give SMEs a way to organize their financial information in real-time. Embedded in its software is a way for companies to apply for short-term working capital loans “with just three clicks, and receive the capital in a matter of hours.”
Airtel Africa gets $200m
Airtel Africa notched a $200m investment for its Airtel Mobile Commerce unit from Qatar Investment Authority. The fresh infusion of capital will be used to further advance Airtel Africa’s “asset-monetization strategy,” with an eye on a possible public listing for its mobile money business sometime within the next four years.
Airtel Mobile Commerce is the holding company for a cross-section of Airtel Africa’s mobile money operations in 14 African countries, including Kenya, Uganda and Nigeria, per TechCrunch. Airtel Africa’s mobile money division is among the biggest providers of financial services in all of Africa, offering mobile wallets, cross-border money transfers, loans and virtual credit cards.
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