Bengaluru-based payments solution startup Cashfree said Tuesday it has raised USD 35.3 million in its ongoing Series B round led by Apis Growth Fund II, a private equity fund managed by London-headquartered investment management firm Apis Partners. Existing backer US-based seed money startup accelerator Y-Combinator also participated in the round.
The five-year-old firm, which helps businesses collect and disburse payments, plans to use the fresh funds to scale up its payment infrastructure, venture into new markets and product segments, and make strategic acquisitions.
“The demand for digital payments is growing rapidly. If we look at UPI (Unified Payment Interface), it has already crossed two billion monthly transactions,” Akash Sinha, co-founder and chief executive, Cashfree told KrASIA. “We will be investing money in our payment infrastructure so that it can handle the next level of demand and be future-ready.”
UPI is a government-backed payment infrastructure that allows direct bank-to-bank transactions. Last month, UPI payments hit a new milestone with 2.07 billion transactions worth USD 44.4 billion, according to the official data.
The company would also use the capital to enter new markets and product segments. So far, Cashfree has been focussing on clients in key sectors like e-commerce, financial services, and travel and hospitality, among others.
“We are now diversifying our products and markets,” said Sinha.
Cashfree plans to offer solutions for cross-border transactions, catering to local businesses selling products and services globally and foreign companies that have a workforce in the country, as well as omnichannel payments to converge offline and online payments for merchants.
Founded in 2015 by Sinha and Reeju Datta, Cashfree started as a platform for automating end-to-end payments for businesses. Aside from offering a payment gateway to accept digital payments from clients, Cashfree came up with a bulk disbursal solution to help businesses with vendor payouts, wage payouts, e-commerce refunds, insurance claims processing, loan disbursements, expense reimbursements, loyalty, and rewards payments.
The startup claims to have annualized payment volumes of USD 12 billion as of March 2020 and counts more than 50,000 businesses as its clients including Cred, BigBasket, Zomato, HDFC Ergo, Ixigo, Acko, Zoomcar, and Delhivery, among others.
Sinha said although the company was impacted during the two-month-long COVID-19 lockdown when the majority of businesses were shut down, it started seeing a recovery since July.
“Some of the sectors such as lending and hospitality and travel are yet to recover, but we are seeing new businesses coming online in segments like education and insurance,” he said. “This has helped us recover fast, and we are now seeing a spike in online transactions.”
Cashfree has been profitable for the last three years while growing at four to five times every year, Sinha added. In the last financial year, the company had clocked USD 13.4 million in revenues, which it projects to grow about four times to USD 54 million this fiscal.
Udayan Goyal, managing partner and co-founder at Apis, who has joined Cashfree as a board member, believes the Indian market continues to represent one of the most exciting opportunities that we see in the world, as digital payments proliferate globally.
Apis Partners, which manages total committed capital from investors worth USD 1 billion, primarily backs growth-stage financial services and financial technology firms. Sinha said apart from the money, Apis brings deep expertise and insights in the payments sector, having backed financial services firms in markets like Africa, and South Asia, and Southeast Asia.
“We expect to get a lot of learnings from other markets that will help us move in the right direction,” said Sinha. “We will also look to expand to other emerging markets like Southeast Asia over the next few years, with the right products that can add value in those markets.”