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Razorpay acquires Tera Finlabs for an undisclosed amount

Razorpay, business payments, and fintech startup announced on Monday that it has acquired TERA Finlabs, an artificial intelligence (AI)-based risk analysis platform, for an undisclosed amount.

TERA Finlabs is a Bengaluru-based company that enables new integrated financing solutions for organizations by providing technology, risk, and financial solutions. Gain Credit, a UK-based digital financial institution, started TERA Finlabs in India in 2018 in order to grow its global footprint in the digital lending sector.

Razorpay and Tera Finlabs logo on a gradient background

Logo: Razorpay and Tera Finlabs

This seems to be Razorpay’s third buyout, after its introduction into the B2B SME financing market in 2019 with the creation of Razorpay Capital. By providing rapid settlements and business loans, Razorpay Capital has helped SMEs solve their financial and cash-flow concerns. Razorpay previously acquired Thirdwatch (an AI-driven startup that helps reduce Return-to-Origin (RTO) fraudulent losses in e-commerce) in 2018 and Opfin (a payroll managing tech firm) in 2019.

Razorpay stated in an announcement that the acquisition of TERA Finlabs is in conjunction with its objective of economically helping MSMEs by developing capabilities in capital solutions, credit underwriting, and data-driven risk management services. The company claims a 40-45 percent month-on-month growth.

According to Harshil Mathur, CEO, and Co-founder of Razorpay, Indian banks are apprehensive of offering business loans to startups and small corporations. Razorpay promises to address these cash flow issues. He further stated, “The team at TERA FinLabs comes with exceptional domain knowledge in credit underwriting and risk management and we see immense value in TERA Finlabs.”

While according to Pradeep Rathnam, CEO and co-founder of TERA Finlabs, the Ministry of Micro, Small, and Medium Enterprises (MSMEs) are an underserved sector. “There couldn’t have been a better time than now for us to join hands with Razorpay and its technological capabilities to support the MSME segment,” Rathnam remarked.

Razorpay further secured $160 million in a Series E round driven by existing investors including Singapore’s sovereign wealth fund GIC, and Sequoia Capital India, earlier this year. In the six months after the entry into the unicorn club, the converged payments solution company has tripled its valuation to $ 3 billion. The fintech startup is also backed by Mastercard Inc.

The company has attained a TPV (Total Payment Volume) of $40 billion and seeks to further strengthen its dominance as one of India’s leading full-stack fintech startups. Razorpay already processes payments for more than 8 million organizations, such as Facebook, Airtel, Ola, Zomato, Swiggy, CRED, and ICICI Prudential, and is on its way to achieving 200 million customers by 2021. Over the course of 2020 alone, it had taken in about 700,000 merchants and projected to process annual transactions of $50 billion by the end of 2021.

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