BharatPe gives 80x returns to investors as valuation tops $900 mn

BharatPe, which is set to become the next unicorn, has given exits to 18 of its angel investors with returns as high as 80x in just two years in the recently concluded funding round where the fintech company’s valuation crossed $900 million.

Ashneer Grover-led BharatPe said, till date, there has been no other Indian entrepreneur who has given this kind of exponential return to his individual angels, and that too in just two years of kickstarting the business. The Delhi-based company has already returned Rs 102 crore cash to its secondary investors as against the initial angel round of Rs 1.9 crore. Around 9 angel investors including serial entrepreneur Kunal Shah continue to hold stock worth Rs 107 crore as per the latest Series-D valuation.

“The purest relationship between an operator and investor is of returns. I feel immense gratitude for all the angels who took the risk on us and helped our startup,” said Ashneer Grover, co-founder and CEO, BharatPe. “Not a lot of people would know that this was a ‘risk-free’ return, as in a different scenario I would have sold my house to make the investors good. Now heads down back to work – a lot more to be built at BharatPe.”

Grover, a former chief financial officer at e-commerce firm Grofers, said that he is “personally very discomforted” by fundraise hype and therefore tend to underprice. “I did my angel round at $3 million valuation despite all my credentials,” said Grover. “I, therefore, set up my angels for an exponential outcome in case of success. I just wish a lot of founders spend less time negotiating high vanity valuations and focus on business building instead. As a founder you’ll start and end with 10,000 initial company formation shares – so no point spending time on cap table optimization.”

BharatPe recently closed the Series D fundraise of $108 million at a $900 million valuation with participation from all 7 existing investors. These included Coatue, Sequoia Capital, Ribbit Capital, Steadview Capital Management, Beenext, Amplo and Insight Partners.

In the Series D round which was oversubscribed, institutional investors showed their intent to consolidate the cap table and hence, the company gave the opportunity to ESOP (employee stock ownership plan) holders and angels to liquidate.

Grover was backed by angel investors such as Hero Group scion Akshay Munjal, Cred founder Kunal Shah and Park+ founder Amit Lakhotia. The other investors included AngelList partner Utsav Somani and former Pine Labs executive Nipun Mehra.

“I am happy about the outcome. If Ashneer (Grover) had told me that, ‘I am going to give you 70 times multiplier’ for investing in his company, probably I would have invested more capital,” said Anuj Golecha, co-founder at Venture Catalysts, one of the investors which exited from BharatPe. “This gives very strong confidence to the entire ecosystem that it is time when there would be many more such opportunities for investors in the coming decade and they need to put more capital in early-stage companies, “ said Golecha, whose firm has backed firms such as Dukaan, Rentomojo, Coutloot, Beardo and PeeSafe.

Another early investor who got the exit is Anshoo Sharma, chief executive at offline discovery and rewards platform magicpin, who was a classmate of Grover at IIM-Ahmedabad in 2006. “It is just inspiring the rate at which BharatPe has executed on its vision, raised capital and built the company,” said Sharma, a former investor with Lightspeed Venture Partners. “I just met them and they are all charged up to change how payments are being done.”

BharatPe which competes with players like Pine Labs, Paytm and Mswipe provides payment technology and digital lending for offline businesses, including kiranas. With the balance sheet well capitalized (more than $200 million in the bank) the firm expects to deliver a $30 billion total payment volume (TPV) and build a loan book of $700 million with small merchants by March 2023.

The company is seeing rapid growth, as the Covid-19 pandemic has significantly accelerated digital payments. BharatPe’s payments business has grown 5x and its lending business has grown 10x in the last 12 months. The firm aims to build India’s largest B2B financial services company that can serve as a one-stop destination for small merchants.

The firm is facilitating over Rs 200 crore of loans to its merchant partners every month through its non-banking financial company (NBFC) partners. It has also deployed more than 50,000 point-of-sale (POS) machines.

80x, the returns that 18 angel investors of BharatPe got.

$900 mn, the valuation the firm recently crossed after fundraise.

$30 bn, the total payment volume (TPV) BharatPe aims to achieve by 2023.

$700 mn, the loan book being build by the firm for small merchants.