Pine Labs acquires API infrastructure startup Setu

Merchant commerce platform Pine Labs has acquired fintech infrastructure company Setu. According to Entrackr's sources, the deal is worth around $70 million. 

"Setu will retain its team and brand and continue to run independently," the company's co-founder Sahil Kini said in a virtual press briefing on Thursday.

This is the third acquisition for Pine Labs in 2022. The Singapore-registered company picked up a majority stake in payments solution provider Mosambee in April and Mumbai-based online payments startup Qfix in February.

Fintech infrastructure company Setu has expanded its offerings and now covers payments, data, investments and lending through its automated programming interface (APIs). In August 2021, the company partnered with Google Pay to offer fixed deposits through Equitas Small Finance Bank.

The firm also runs open-source initiative D91 Labs to provide research and help fintech companies in complying with regulatory requirements.

Setu had raised around $18.5 million including a $15 million Series A round led by Falcon Edge and Lightspeed in April 2020. The company was valued at around $50 million during the round. Entrackr had exclusively reported the development.

Setu competes with the likes of M2P Fintech, Signzy and Decentro in the API infrastructure business.

While Setu is yet to file its annual financial statement for FY22, the company reported operating revenue of Rs 3.31 crore in FY21 versus nil during FY20.

Setu founders – Sahil Kini and Nikhil Kumar –have been members of India Stack for more than six years. The initiative is a privately-owned bouquet of proprietary software applications and APIs powering most Aadhaar applications and the Digital India initiative.

Previously, Kumar was the co-founder of Voyce, a customer feedback system for SMBs that was later acquired by Exotel whereas Kini had founded Magnet Works, an industrial IoT startup.

The deal comes at a time when Pine Labs is expanding its offerings beyond merchant payments. Apart from its Point of Sale (PoS) business, where the company offers card swiping terminals to merchants, Pine Labs also develops Buy Now Pay Later (BNPL), invoice management, gifting solutions and e-commerce solutions.

Currently valued at $5 billion, the firm is also contemplating an initial public offering (IPO) in the US. Per media reports, it would raise around $500 million at a valuation of $6-7 billion from the public market.