UPI-enabled digital payments platform PhonePe has secured $28 million in a fresh funding round from Flipkart and it comes four months after it had raised Rs 585.66 crore from its Singapore-based holding entity.
Entrackr had exclusively reported the development in December.
Flipkart had also pumped in $56 million in its payments arm in November last year. With the latest investment round, PhonePe has amassed about $928 million in total capital ever since its acquisition in early 2016.
Of late, PhonePe appears to be changing track from growth at any cost to chasing profitability. Locked in an intense battle with Google Pay to dominate the UPI ecosystem, the company’s chief executive officer Sameer Nigam had recently revealed PhonePe’s plan to turn profitable by 2022 and go public in 2023.
Nigam talking about profitability and going public came as a surprise to many since the firm has been burning a lot of capital. During FY19, PhonePe spent 2,153 crore to earn Rs 184 crore in operating revenue. It recorded a 2.4X jump in losses to Rs 1,907 crore during the same period.
Looking at the huge gap between expense and revenue, it appears tough for the company to optimise profitability while maintaining growth.
Last year, Flipkart’s board gave the final nod to hive off PhonePe as a separate company. According to media reports, the company was in talks with Tencent and Tiger Global to raise $1 billion at a valuation of $8 billion.
However, the talks didn’t culminate into a deal.
The new infusion will help PhonePe maintain its pace in the UPI ecosystem. However, the tranche is very small when compared to its monthly burn which is in the tune of over $15 million.
Raising outside capital is the need of the hour for PhonePe and it would be interesting to see at what valuation it does. It’s worth noting that the company has been in talks with Tencent for more than a year but the round is yet to be materialised.