Bengaluru-based fintech startup Happay has raised $10.1 Mn (INR 65.13 Cr) in a Series B funding round led by Sequoia Capital India. Singapore-headquartered private equity fund Axiom Capital, AME Cloud Ventures, Brad Garlinghouse of Oak Street Trust and US-based businessman Ben Nelson also participated in the round.
As per filings with the Ministry of Corporate Affairs (MCA), the investment was raised last month, against the allocation of 6,294 preferential shares at a premium of $1,603 (INR 1.03 Lakh) a piece.
Confirming the fundraise, a spokesperson for the company said, “We are growing strong in India and our solutions are used by 4500+ businesses. We are present in 10 cities with partners in 27 cities. We are well funded today and are open to growth opportunities. In recent years, government’s policies like demonetisation, GST, has provided a conducive environment for the growth of digital payment, and we are looking at the next growth trajectory for business.”
As part of the funding round, Sequoia Capital has invested $5.98 Mn (INR 38.5 Cr) in Happay, while Axiom Capital has fuelled another $4 Mn (INR 25.75 Cr). Yahoo co-founder Jerry Yang-led AME Cloud Ventures has poured $54,274 (INR 35 Lakh) into the fintech startup.
The fundraise, according to a report by VCCircle, has raised Happay’s post-money valuation to somewhere between $53 Mn and $55 Mn. At present, Sequoia owns around 34.2% stake in the startup, while early investor Prime Venture Partners has 26% stake in Happay.
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Some of Happay’s other shareholders include founders Anshul Rai and Varun Rathi, Times Internet and Axiom Capital, among others.
Till date, the business expense management solutions provider has raised about $18 Mn funding from a bevy of investors. Happay originally secured $500K Seed funding from Prime Venture Partners in 2013. Later in July 2015, Sequoia Capital reportedly led a $7.2 Mn investment round in the fintech platform, along with existing backers.
Happay: $372 Mn Gross Transaction Value, $18 Mn Funding, 4500+ Clients
Founded in 2012 by IIT graduates Anshul Rai and Varun Rathi, Happay (short for ‘Happy + Payments’) was initially launched as a B2C peer-to-peer (P2P) payments platform. By the end end of 2013, the company reportedly amassed more than 200,000 users – mostly college-going young students. Realising that the revenue model of the consumer-facing business was not strong, the founders soon turned towards a B2B model, with the aim of helping businesses and corporates manage their expenses minutely.
During an earlier interaction with Inc42, Happay co-founder and CEO Anshul Rai elaborated that any corporate usually has to manage its business expenses under four categories – employee adhoc, day -to-day operations, vendor payments, and salaries. While salaries are quite fixed in nature, the other three are extremely variable, cumbersome to accumulate and need constant tracking on a real-time basis.
To solve this problem, Happay issues a customised Visa/Mastercard in association with HDFC and RBL banks, to the corporates depending upon their requirement. With each employee having their own card, the expenses carried out are reported on the go and are accumulated automatically on Happay’s mobile app.
As claimed by Anshul, the company has, to date, issued more than 150K Happay cards. Owned by VA Tech Ventures, the fintech startup has reported a near 6x growth in gross transaction value in FY17 and is currently processing transactions worth $372.2 Mn (INR 2400 Cr) yearly. The company clocks over 1 Mn transactions per month, worth around $31 Mn (INR 200 Cr).
Having seen an annual growth of 200% from the last fiscal, Happay currently caters to 4,500+ businesses across the country such as Aditya Birla Retail Ltd, Health & Glow, YourStory, Subway, Ayurveda hospitals, Unnati NGO, Ibibo group, Uber, Grofers, Urban Ladder, Knowlarity Solutions, etc. It has a workforce of more than 200 employees.
According to the company’s filings, Happay reported a threefold increase in income in FY17 to $1.5 Mn (INR 10.09 Cr) from $538K (INR 3.47 Cr) in the fiscal year before that. Its total expenses also soared from $1.2 (INR 8.26 Cr) to $3.3 Mn (INR 21.31 Cr). As a result of the jump in expenditure, the startup’s losses surged to $1.7 Mn (INR 11.21 Cr) from $741K (INR 4.78 Cr) in FY16.
In the expense management space, Happay competes with a growing number of startups including ItzCash-backed Finly, Bengaluru-headquartered Fyle Technologies and Gurugram-based Numberz.in. With an additional $10.1 Mn funding from Sequoia Capital, Axiom Capital and others, the startup is looking to cast a wider net in the country’s booming fintech sector.