While other startups have been raising millions in new funding rounds, PhonePe has done it amidst the uncertainty that is emanating from the fallout of Flipkart’s tumultuous separation with its founder and CEO, Sachin Bansal. Reports suggest that various groups are vying to acquire some or all of PhonePe and given how valuable its technology could be in a post-Flipkart world, investors are clearly bullish on the potential of this company.
General Atlantic, a prominent venture capital firm, led the largest ever funding round in India’s PhonePe. The company is receiving $12 billion pre-money valuation from investors. This sizable investment will help PhonePe expand its reach into new markets and accelerate its PRODUCT development.
Investors appear to be rating PhonePe much higher than its publicly-traded rival, Paytm. The company is estimated to be worth $12 billion, up from $5.5 billion in late 2020. This sizable valuation could mean that investors believe that PhonePe has a chance of becoming the leading mobile payment platform in India. While PhonePe does not yet haul in millions of dollars in annual revenue, its technology may prove to be powerful enough to win over consumers and merchants alike.
Walmart’s presence in the current funding round is a notable indication of the company’s commitment to PhonePe. The store chain is one of the largest investors in India’s mobile payment app and its inclusion in this latest round speaks to how successful the service has been so far. With more than 100 million active users, PhonePe is quickly becoming one of India’s most popular mobile apps.
Launched in 2014, PhonePe is India’s leading mobile payments platform, with over 400 million registered users and 35 million offline merchants relying on the platform. With UPI as its backbone, PhonePe has become the go-to choice for mobile payments in India.
PhonePe has been able to grow rapidly because of its innovative services and low prices. However, there is a concern that the regulator may enforce a market cap check on players later this year, limiting PhonePe’s growth. This delay gives the company another two years to continue its success.
The PhonePe fundraise will be used to accelerate the Government of India’s vision of digital financial inclusion for all, which is a lofty goal. India has made great strides in digitizing its economy and society, but there are still a large number of citizens who do not have access to banking services or limited online banking options. PhonePe aims to change that by building an easy-to-use and affordable mobile application that can help everyone in India bank from their smartphones. With this latest investment, General Atlantic shows faith in the potential of the PhonePe team and its mission.
The UPI payments company is looking to invest in new business verticals, such as insurance, wealth management, and lending. This is in order to facilitate the next wave of growth for the platform in India. Additionally, the company plans on continuing to grow its user base
According to reports, PhonePe was recently separated from Flipkart and now no longer has a stake in the payments firm. This separation may impact Flipkart’s valuation as the company doesn’t plan to re-enter the mobile payments market.
The investment by PhonePe will help the company to expand its operations and increase its revenue. The new funds will be used to make significant investments in infrastructure, including in the development of data centers and build more financial services. PhonePe also plans to invest in new businesses, such as Insurance, wealth management, and lending. This should increase the company’s reach and allow it to compete better with rivals such as PayPal Holdings Inc., Uber Technologies Inc., and Amazon.com Inc.
Rahul Gandhi, the president of the young, politically powerful Congress party has often talked about banking for the poor. According to his office, in July 2018 he spoke at a meeting organized by PhonePe bank and announced plans to open 20 million free bank accounts in rural areas of India by 2022. The goal is largely straightforward: give more people access to basic financial services and reduce reliance on informal lenders who charge exorbitant rates. But it’s also a risky proposition for two reasons. First, PhonePe is one of India’s lesser-known banks — meaning that it’s more likely to face competition from bigger rivals once Gandhi rolls out his ambitious campaign agenda. Second, even if PhonePe succeeds in expanding its reach and lowering costs for customers DownUnder*, there’s no guarantee that such changes will trickle up the economic ladder: poorer citizens may not benefit as much from increased access to banking services as wealthier ones do.
Rahul Gandhi’s plans to open 20 million free bank accounts in rural areas of India by 2022 are both politically risky and potentially costly – should PhonePe be able compete with larger rivals or if benefits extend beyond those with above-average income levels
The PhonePe team is excited to partner with General Atlantic and help enable the next generation of digital innovation in India. Their vision is aligned with General Atlantic’s longstanding commitment to backing high-growth businesses focused on inclusion and empowerment, which makes them a perfect fit for PhonePe. This partnership will allow both companies to benefit from each other’s expertise and resources, while also bringing new opportunities to the Indian market.
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