SUMMARY
Amazon and Tapzo have been in discussions about the deal for the past three months
The valuation of Tapzo for the deal is speculated to be a markdown of nearly 50%, similar to its last fundraise
According to reports, the deal was valued at between $40-45 Mn
Global ecommerce company Amazon has plans to further strengthen its portfolio and presence in India as the company has acqui-hired Tapzo, an “all-in-one” app that aggregates 35+ different apps in one place, across categories such as cabs, food, recharge, bill payment, news, cricket, horoscopes, and more.
According to Inc42 sources, the deal has been under discussion for the past three months. Tapzo’s valuation for the deal is speculated to be a similar markdown as its last fundraising.
Tapzo raised $1.9 Mn in December 2017 from existing investors RB Investments Pte Ltd and Ru-Net South Asia at a post-money valuation of $47.3 Mn (INR 308 Cr) — nearly 50% less than its valuation in the previous round — $85.54 Mn (INR 600 Cr).
Sources revealed that the Tapzo team was sitting with Amazon Pay team in their WTC office.
Tapzo declined to comment on the deal and Amazon didn’t reply to email queries from Inc42.
An ET report said that the deal was valued at between $40-45 Mn, including the stock component, and will give a cash-out to investors while co-founders of Tapzo Ankur Singla and Vishal Pal Chaudhary will get some cash along with shares in Amazon.
The report added that Tapzo’s founders are likely to get on board Amazon Pay’s team in India.
Tapzo: Never Giving Up
Tapzo was founded as Akosha in 2010 and later renamed as Tapzo by Ankur Singla, Vishal Pal Chaudhury, Avinash Vankadaru, and Vishrut Chalsani. Tapzo is an aggregator platform that allows users to access over 35 apps including Ola and more from its interface.
It offers a bouquet of transaction use cases for customers by allowing them to make mobile, DTH and data card recharge, bill payments, order cabs and food, book flight and bus tickets and avail of home services amongst others.
The company is backed by investors like Sequoia Capital, Singapore-based RB Investments and Ru-Net amongst others, but the company continues to struggle to grow its transaction volume even after experimenting with several pivots and rebranding exercises in the past.
Earlier in conversation with Inc42, Ankur said, “Today, close to 1,40,00 users use our app daily and we do close to 55,000 transactions a day with an annual run rate (ARR) of INR 210 crores in GMV/bookings. And we plan on growing 2X in the next six months.”
According to the MCA filings accessed by Inc42 Datalabs, Tapzo posted a net loss of INR 99.32 Cr for FY17, a 30% increase from INR 76.05 Cr of FY16.
With an operational income of INR 11.41 Cr for FY17, the company spent INR 59.26 Cr for its employee benefits.
Also, Tapzo made INR 5 Cr revenues as commission for its services and INR 6.39 Cr from customer experience management service.
One of the major investment done by the company was in advertising and marketing as it increased its expenses from INR 12.28 Cr in FY16 to INR 36.93 Cr in FY17, almost a 200% spike.
Amazon: Betting On Payments
Since May 2017, Amazon has invested more than $100 Mn (INR 685 Cr) in Amazon Pay. Earlier, Amazon Pay India head Mahendra Nerurkar had said that the company would continue to invest aggressively in its digital payments arm over the next several months.
During Prime Day sale, which kicked off on July 16, Amazon is offering cashbacks of INR 300. Also, on eve of its fifth anniversary last month, it offered INR 250 cash back to customers.
This shows the aggressiveness with which Amazon is aiming to penetrate the Indian market while competing with local digital payment biggies like Flipkart’s PhonePe and Paytm.
Amazon has also been looking to push Amazon Pay beyond its platform to third-party online merchants as well as to offline touchpoints.
Recently, Amazon invested $5 Mn in digital payments company ToneTag. ToneTag is now looking to roll out new payment modes for Amazon in the next three to four months.
Here are the highlights of the four-year journey of Amazon Pay in India:
- December 2014: Invested $10 Mn in Bengaluru-based gift card technology and retail startup, QwikCilver Solutions (as of now, it has also merged its e-gift cards solution into Amazon Pay)
- 2016: Announced the acquisition of Noida-based payment gateway EMVANTAGE Payments
- December 2016: Launched Pay Balance, a payment option similar to mobile wallets but limited to transactions within the platform
- April 2017: Amazon India secured a licence from the RBI to operate a prepaid payment instrument (PPI)
- May 2017: Received $10.45 Mn (INR 67 Cr) funding
- July 2017: Received another investment of $20 Mn
- October 2017: Amazon increased the authorised capital of its payments arm from $61.5 Mn (INR 400 Cr) to $307.7 Mn (INR 2,000 Cr)
- October 2017: Amazon pumped $40 Mn (INR 260 Cr) funding into Pay
- March 2018: Amazon Pay raised $30 Mn (INR 195 Cr) from its parent entity
Update, 5.07pm, August 28, 2018:
Inc42 was tipped by two sources on email about the acquisition on August 27, but decided to validate it further before doing this story.
This development was, however, first reported by Entrackr.
