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MobiKwik To Raise $100-150M at $1B Valuation, Ready To Enter Unicorn Club Soon

Mobikwik plans is to invest as much as $45 million of the capital on growing user and merchant bases, and expand its current base of six offices to more than 20.

With high-profile investments from Alibaba and SoftBank fueling an impressive growth in India, the biggest fintech startup player Paytm has only gained since demonetization period. India’s payment market has sewn up but at least one company will agree to differ on that.

The second-in lead MobiKwik, the mobile payments startup is climbing up the ladder and setting up its hold in Tier-2 cities in India. They have been confident and shown steady growth signals since their inception in 2009.

They are taking advantage of its rival’s focus on e-commerce and recent entry into payment banking and plan to take the leap just now. MobiKwik, which is solely focused on  digital payments, is in the process raising its largest finance from investors to date.

The company confirmed to BW Businessworld that it is talks to raise $100 million-$150 million in a round that would value the company at more than $1 billion, thereby putting it into the elite club of tech unicorns. 

Taku declined to name the investors that her company is talking to, saying only that they include one major strategic investor and a number of financial institutions. They expect the round to close in the next month or so. Mobikwik plans is to invest as much as $45 million of the capital on growing user and merchant bases, and expand its current base of six offices to more than 20.

The next most talked about piece of new is Mobikwik's valuation, the fund they would raise could be at the valuation of $1 billion. The fundraising could double MobiKwik’s funding to date, which stands at $126.85 million. 

However, it would still remain an underdog in the battle. Until it forays into different verticals or brings out a new stream of service, which build its brand it will not become a market leader pan-India.

On paper, the statistics of its business are hugely impressive. India’s demonetization in November of last year, a move that saw ₹500 and ₹1,000 banknotes (85 percent of total currency) removed from circulation, gave Paytm a huge boost. In the immediate aftermath, traffic grew 435 percent, downloads jumped 200 percent and overall transactions increased  by 250 percent. The firm finished the year with 177 million mobile wallet customers — up from 122 million a year earlier — and it went on to cross the 200 million mark at the end of February.

Taku points out vital stats which show how much Paytm still is yet to grab, she points out that Paytm is yet to surpass 100 million downloads on Android. She asserts it's “hard to imagine” that it has more than nearly 250 million registered users as it claims.

To support her argument, she cites Ola Money's example, the payment service that Indian ride-hailing giant Ola spun out into a standalone business in late 2015.

Ola money is not accepted in various places, whether Amazon or even Flipkart, aren't clear where they want to put their clear focus. 

Facts about MobiKwik's Steady Growth

The company claims to have ridden the wave of demonetization. Taku said it's registered user base jumped from 25 million to 55 million, while its merchant base rose to 1.5 million from 250,000 before demonetization and downloads rose five-fold. MobiKwik’s ambitious target is to sustain that growth and reach 100 million users and 10 million merchants in the next year.

Now, the company is riding on net revenue profitability, by removing merchant acquisition costs and are on a path to profitability.

Taku stated that the financial payment app, will be directly delving into direct financing and lending business supporting digital insurance and investing in the economy. One such example is a deal announced with state-owned telecom operator BSNL to gives its 95 million customers basic financial services via a co-branded wallet app.

Currently, the service processes $2 billion in annual GMV — that’s the overall value of transactions but it is aiming to reach $10 billion by the end of this year.

Taku is bullish on the future beyond 2017, pointing out that digital payments currently account for just 15 percent of the estimated $1.5 trillion that is spent by consumers in India each year. She said the figure could reach 60-70 percent over the next two years and is clearly determined to ensure that Paytm isn’t the sole beneficiary of that boom.


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