Why Razorpay acquired Ezetap for $200 mil?
After Thirdwatch, Opfin, Tera inlabs, Curlec, IZealiant, it's Ezetap time.
Welcome to the 72nd edition of the GrowthX Newsletter. Every Tuesday & Thursday I write a piece on startups & business growth. Today’s piece is going to 94,400+ operators & leaders from startups like Google, Stripe, Swiggy, Razorpay, CRED & more
Before we begin, quick back story on Razorpay 🗓
The idea to kick off a payment mammoth came to Shashank Kumar & Harshil Mathur during a college side project around crowdfunding. This is when they realised how broken the system was if a young startup wanted to accept money.
If thousands of people are going to start-up, who’s there to support the payments?
And this birthed Razorpay - It’s a one stop destination for all modes of payment.
Fast forward to 2022 ✈️
Razorpay powers upwards of 8 million businesses, have raised a total of $816.3 million & is one of the major payment player in India with annual revenue of $100 million & scaling.
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Early victories, innovation, & challenges 🎯
Razorpay acquired 300+ clients on they Day 1 with 0 marketing. This was a testament to how much the market wanted the payment gap to be filled. It was insane to pull product right on the MVP stage.
Backed by the insight, Razorpay’s interest in solving the entire stack of payment issues began. They soon launched Route, Smart Collect, Subscriptions, and Invoices - this collectively solved for collection, reconciliation, and disbursal challenges of merchants. Then, disrupting SME lending for merchant’s cash-flow challenges.
This revolutionary product was Razorpay capital. Soon after, they also launched Razorpay invoices & Razorpay payroll. Since then, there has been no turning back.
So why acquire Ezetap? 💰💰💰
From the time you buy something on Amazon
to how Amazon pays its sellers
to how sellers pay their vendors.
Razorpay wants to manage all your payments.
From payments → banking → lending, Razorpay wants to do it all & to do that it can not just keep building but it needs to acquire products across user journey. That’s what Razorpay is doing at the moment.
So what’s the pattern to the acquisitions?
Well, yes. The leadership has shown key interests in expanding in the south Asian markets, touting it to be a stepping stone for its plans for global expansion ahead. All 6 acquisitions help Razorpay in powering up their tech or distribution for different modes of payment.
August 2018: ThirdWatch, Fraud Analytics AI-platform
November 2019: Opfin, payroll & HR management solution
July, 2021: TERA Finlabs, AI-based risk tech SaaS Platform
February 2022: Curlec, leading recurring revenue platform
March 2022 : IZealiant Technologies, payments tech solutions for banks
August 2022: Ezetap, this get’s interesting with offline world
With Ezetap on its side, the brand would now go deeper into offline payments across India. Ezetap managed over $10 billion annual transactions in India through their point of sale machines, billing, loyalty solutions among others. Let that sink in.
This is a domain that Razorpay hadn’t tapped yet, and now they’d be able to power up payments in-store and on-delivery - which is a huge market in India. The brand will also cross-sell its other services, including loan offerings, to offline businesses & merchants.
So what’s the insight?
With the amount of capital Razorpay has raised, it is at a point where buying out companies in the user journey is faster than building these offerings from scratch.
Plus the added headache of GTM & iterations with features/ products built from scratch. This pattern will keep repeating for ton of sectors including payments, edtech & even in crypto world where building is slower and lesser predictable than buying out a ecosystem product.
Want to build the right product?
If you remember, at the start of the story, we spoke about how Razorpay’s product was bought by 300+ merchants on day of launch. Now what is the framework behind building products that give you inbound distribution? That’s what we preach & discuss at GrowthX.
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