Indian Fintech startup Razorpay has acquired TERA Finlabs. TERA Finlabs is a Bengaluru-based startup providing technology, risk and capital solutions to enable embedded financing solutions for businesses. Razorpay announced the acquisition on July 19, 2021.
The statement released by Razorpay said that this acquisition of TERA Finlabs, an Indian subsidiary of UK-based digital lender, GAIN Credit, is per Razorpay’s strategy. It will help the startup financially support as many MSMEs as possible by building core capabilities in capital solutions, credit underwriting, and data-driven risk management abilities.
Acquisition to boost MSME lending’s
Financial details of the transaction were not disclosed in the statement that was released. It has been said that TERA Finlabs will provide its entire technology stack, risk management support, and onboarding solutions to create and enable a credit line for Razorpay’s merchant network.
Razorpay CEO and co-founder Harshil Mathur said that in India, banks are cautious of providing business loans to startups and new SMEs due to the risks attached to such transactions. Through our lending platform, Razorpay Capital, we have been striving to solve this problem.”
“By tackling these cash flow challenges, we are making it easier for businesses to get finance and grow. While progressing in that journey, acquisition such as this fits perfectly with our vision of developing tailor-made affordable credit solutions for the underbanked small businesses across industries so that they can digitally transform and disrupt,” added Mathur.
Razorpay can now cater to credit needs of over 10,000 businesses
With its current capital and TERA Finlab’s technology capabilities, Razorpay will be able to service the credit needs of over 10,000 businesses in India by next year, the statement said. It is Razorpay’s third acquisition in less than three years. Besides the latest acquisition, the startup previously took over Thirdwatch, an AI-driven company in 2018, and Opfin – a payroll management software company – in 2019.
“MSMEs were an underserved market for a long time. However, in the last 16 months, they have started to show rapid growth with their adoption of digital. And this has created an opportunity for significant disruptions in the lending sector. Embedded Credit is one such innovation that I’m certain will transform this space,” said Pradeep Rathnam, co-founder and CEO of TERA Finlabs.