US-based mutual fund T Rowe has raised Vijay Shekhar Sharma’s Paytm‘s valuation by about 35% to $255 per share, totaling its valuation to $16 Bn.
T Rowe Price Communications and Technology Fund has valued its investment in One97 Communications at $82,16,610 for 32,222 shares, according to a Securities and Exchange Commission (SEC) filing of the company.
The value of each Paytm share was $255 as of September 30 this year.
Paytm spokesperson told ET, “We see strong traction in our business across digital payments, consumer internet, merchant services and financial services. We are thrilled and motivated with all our shareholder’s support that Paytm has always enjoyed. This has helped us in creating India’s home-grown digital champion.”
Paytm’s spokesperson also added that every investor who has ever invested in Paytm has held on to the shares for at least five years and has always sold it at a profit.
Earlier, T Rowe Price has cut down the valuation of its shares in Vijay Shekhar Sharma-led Paytm by 26%, as of June 2020. The investment firm had led Paytm’s $1 Bn round back in November 2019, along with the participation of Ant Group, SoftBank Vision Fund and Discovery Capital. This was the largest funding round raised by an Indian startup in 2019 and had valued the company at $16 Bn.
T Rowe Price is said to have invested at least $150 Mn in Paytm in December 2019 and had acquired shares for $254 each.
But What’s Beyond Valuation?
Indian unicorns are also the largest job creators and employers in the Indian startup ecosystem with $116 Bn in total valuation and over $35.7 Bn in total funding. But in the post-pandemic era, higher valuations will no longer be an indication of the success of a startup, especially a unicorn.
Beyond the glorified valuations of the majority of unicorns in India and at their bare financial metrics, a very different picture emerges. As per an Inc42 Plus analysis, based on a sample set of 30 out of the 35 unicorns, a mere 30% or nine unicorns are EBITDA-positive i.e with profitable unit economics. Given the economic crisis globally, survival and scale for startups without the prolonged inflow of venture capital investments is out of the question.