Exclusive: Cashfree in talks to raise $25 Mn at around $150 Mn valuation

Payment gateway startup Cashfree is in advanced talks to raise $20-25 million in a fresh round from new and existing backers, said two persons aware of the matter.

This would be a second investment for a payment gateway in India this year. Razorpay recently scooped up a $100 million round led by Singapore-based GIC and existing backer Sequoia Capital to enter the unicorn club.

“London-based private equity asset manager Apis Partners is one of the new investors. The contours of the deal have been finalised and it would lead the round with existing investors,” said one of the sources mentioned above on the condition of anonymity. “If nothing goes wrong from here, the deal is set to be announced in a few weeks.”

The Y-combinator-backed startup has so far raised around $5.6 million including $5.5 million Series A round in April 2019. Apart from the Silicon Valley-based accelerator, South Korean venture capital firm Smilegate Investments had invested in the Bengaluru-based startup.

Former British finance minister George Osborne and managing director of Cholamandalam Investment and Finance Vellayan Subbiah had also invested in their personal capacities. Notably, Cashfree has no Indian venture capital firm on the cap table yet.

“The Series B round will push the valuation of Cashfree to around $150 million. More new investors may chip in as the company is in talks with two more investors,” said the second source. The person also requested not be named as the matter is private.

Entrackr couldn’t independently verify the names of the two investors who are in talks with Cashfree. Cashfree declined to offer comment for the story. Queries sent to Apis did not elicit an immediate response.

Founded by Akash Sinha and Reeju Datta, Cashfree is the only Indian startup in this space to post profitability for three consecutive fiscal years. It had posted Rs 1.4 crore and Rs 4.1 crore profit after tax in FY18 and FY19 respectively while the company’s unaudited financials claimed Rs 19.5 crore profit after tax in FY20.

The five-year-old startup runs over half a dozen products including payment gateway, payouts, auto collect, UPI stack and marketplace settlement. It has rolled out payment APIs for some of the top companies and startups such as Delhivery, Bigbasket, Acko, CRED, Xiaomi, HDFC and Zomato. 

Razorpay that recently turned unicorn — a startup valued at $1 billion or more — is also expected to be profitable in FY20. According to the company’s last financial report, it registered 2.14X growth in operating revenue to Rs 193 crore with losses of Rs 3 crore during FY19, a 74.5% decline as compared to Rs 13 crore in FY18.

Cashfree competes with Razorpay, Paytm, Billdesk, CC Avenue, PayU among several others. 

Update: We have updated the headline and story to reflect that the valuation of Cashfree would be around $150 million in Series B round.