MobiKwik Raising $100 Mn-$150 Mn Round To Catapult It To Unicorn Club

MobiKwik is in talks to raise a fresh round of $100 Mn-$150 Mn and this new round will take its valuation to $1 Bn, making it a Unicorn.

This development was revealed by co-founder Upasana Taku to TechCrunch. Its close rival Paytm is already a Unicorn and is currently valued at over $7 Bn.

Taku declined to disclose the details of the investors but said that there was at least one major strategic investor and a number of financial institutions that they were currently in talks with. MobiKwik expects to close the round in the next few months. The company plans at investing about $45 Mn for acquiring and growing customer and merchant base. The funds will also be used towards increasing the number of MobiKwik offices from 6 to 20.

“We couldn’t have imagined where we’d be in terms of numbers. Now, we’re net revenue profitable — when you remove merchant acquisition costs — and are on a path to profitability,” Taku stated. She also mentioned that the platform will introduce a slew of services related to its core verticals such as online lending, insurance, and investing to take that final jump towards profitability.

MobiKwik: The Journey

MobiKwik was started in 2009, by Bipin Preet Singh and Upasana Taku. The mobile wallet enables has partnered with businesses like Café Coffee Day, PVR, Domino’s Pizza, Pizza Hut, TastyKhana, JustEat, eBay, Jabong, Snapdeal, HomeShop18 among others. MobiKwik claims to have over 55 Mn users and 1.5 Mn retailers on its platform.

The company has raised a total of $151.9 Mn in 6 rounds of funding, to date. It had raised $25 Mn in Series B funding from Tree Line Asia in 2015. Japanese and Taiwanese investors also backed the company for an undisclosed amount In May 2016. This was followed by a strategic partnership agreement between MobiKwik and South Africa’s Net1UEPS and a $40 Mn investment by Net1UEPS. MCA documents filed by the company also indicated that there have been two more investments between January and March 2017. In January 2017, Cisco Systems invested $650K (INR 4.2 Cr), while Bennett, Coleman & Coleman Ltd invested $351 (INR 22.7K) in March 2017.

Its current shareholders include Sequoia Capital, Tree Line Asia, American Express, Cisco Investments, GMO Payment Gateway, and MediaTek, as well as Bipin Preet Singh and Upasana Taku, the founders and executive officers.

In the wake of November 8 demonetisation, MobiKwik launched MobiKwik Lite in order to cater to India’s banking underserved in the interior regions of India. And, the company has partnered with ICICI Bank for its users to access India Stack facilities via UPI. As reported, the company has declared a GMV of $2 Bn and is aiming to reach the $10 Bn in the coming year.

Paytm Vs FreeCharge Vs MobiKwik Vs Amazon Pay

Gurugram-based MobiKwik chiefly competes in the digital payments space with entities such as Paytm, FreeCharge, Oxigen Wallet, Citrus Pay, and PayU India (after it acquired Citrus Pay). Space has seen considerable action after the demonetisation drive announced by the Indian Government in November 2016. This action has come in the form of more users adopting digital payments – in the case of Paytm declaring 200 Mn users and counting in February 2017.

MobiKwik too saw an uptick in their user transactions too. MobiKwik had announced a 40% increase in app downloads, in less than 18 hours of the original demonetisation announcement. User traffic and merchant queries too went up by about 200% among its users. “Our payment gateway business has seen crazy growth — demonetisation has been great for us, all business numbers have grown at least 3X,” Taku said.

Oxigen Wallet also reported an increase in the load money transactions by up to 40%-45% till the next day, November 9, 2017. Ezetap and Ola Money too reported significant increases in their traction figures, following the drive. While these numbers have stabilised over the course of the last two quarters, the blanket adoption of digital payments cannot be denied.

It is for this reason that the fintech battleground itself has turned fierce with Japanese investor SoftBank infusing Paytm with $1.4 Bn. Paytm has also turned its attention from a pure play digital wallet to launching a Payments Bank in May 2017.

On the same, Taku told TechCrunch that, “It is reneging on payments while it is pushing bank and ecommerce services… Something’s got to give, it is not possible to do justice on 10 different verticals.”

FreeCharge, on the other hand has its own share of troubles. Its parent company, Snapdeal (which bought FreeCharge for $425 Mn) is in the final stages of getting acquired by Flipkart. FreeCharge too is on the selling block with PayPal and MobiKwik being a contender in the race. Recently, Inc42 reported that Paytm has agreed to take on the beleaguered digital wallet at an 80% valuation cut. And a non-exclusive term sheet has been exchanged.

Other players such as Whatsapp have also announced their intentions to enter the digital wallet space. The most recent of them being Amazon infusing 10.5 Mn in its digital payments arm – Amazon Pay.

India And The Members Of The Unicorn Club

With the proposed funding round, MobiKwik will look to enter that most hallowed of all startup clubs: The Unicorn Club. MobiKwik would be India’s 12th unicorn overall, and second in the pure-play online payments space, after Paytm.

Classifieds platform and consumer Internet unicorn Quikr has been on an acquisition spree in the last two years. After CommonFloor, it gobbled up StayGlad, Zapluk in the at-home beauty services segment and Stepni in the automobile maintenance services. Most recently, the $1.47 Bn valued unicorn acquired hyperlocal home services startup Zimmber.

Flipkart looks to celebrate its first decade of being in business with a billion dollar plus funding from the likes of Tencent and eBay. The company has also acquired eBay India as part of the funding deal while turning its attention to the fashion category by announcing discount sales and launching a private label just yesterday.

Snapdeal, a fellow unicorn and erstwhile rival is now in the process of being acquired by Flipkart, after a year of downturns – such as layoffs, founders making millions on selling shares, employees questioning the value of their ESOPs and more.

Ola has teed up a substantial amount of funding as it looks to take on global giant Uber. But, the cab hailing unicorn’s problems include having to safeguard founder shares from investor targeting, as well as a recent music copyright infringement case that was filed by a producer in Andhra Pradesh, just last week.

InMobi, one of the earliest names to have broken into the billion dollar valuation club, has recently disclosed a report in which it mentions attaining profitability. Zomato too disclosed an unaudited report which talked about reducing cash burn and inching towards profitability. But unicorn Zomato has had a tougher time in recent weeks, as Inc42 reported a massive security breach of 30 Mn users when the company’s user accounts were hacked.

Of the unicorn brigade, SaaS company Mu Sigma alone has had an uneventful 2017, while fellow compatriot Zoho broke new ground over a number of new product launches. Hike, the only social media messaging platform from India to achieve a billion dollar plus valuation made headlines in 2016 for having raised $175 Mn in Series D from investors such as Tencent, Foxconn Technology Group, and existing investors Tiger Global, Bharti Airtel and SoftBank Group. Hike too has announced a UPI-led digital wallet for its 100 Mn users in partnership with YES Bank.

Digital Payments: MobiKwik’s Challenge And A Multibillion Dollar Opportunity

Now we come to the digital payments unicorn, Paytm, which has gone from strength to strength in the last few months. CEO Vijay Shekhar Sharma entered the Forbes billionaires’ club, and its employees too have profited handsomely off selling ESOPs. Apart from the fundraising and acquisition talks, it is necessary to note that Paytm is now modelling a full-fledged ecommerce mall and payments bank along with its core business model – the digital payment wallet.

And just today, Inc42 reported that Ezetap has acquired fellow competitor FortunePay for an undisclosed amount, in order to build out its digital payments offerings. The Hike Wallet, which has just been launched, also has the potential for disruption, considering the sheer number of users the messenger app claims to have.

The online payments business in India has an immense scope. According to Indian IT Minister Ravi Shankar Prasad, the digital payments space in India has the potential to reach $50 Bn by 2022. With this much potential market share on the line, it remains to be seen whether the strengthening of the MobiKwik war chest is enough for the company to take on well-funded and well-oiled behemoths like Paytm and Amazon.

(This development was reported by TechCrunch.)