Financial solutions company, Razorpay, today announced its acquisition of TERA Finlabs, an AI-based risk tech SaaS Platform, for an undisclosed amount.
TERA Finlabs is a Bengaluru-based startup that provides technology, risk and capital solutions to enable innovative embedded financing solutions for
businesses. TERA Finlabs is an Indian subsidiary of GAIN Credit, a leading UK digital lender, which was launched in 2018 to expand its global footprint in digital lending.
This marks Razorpay’s third acquisition, after Thirdwatch and Opfin, and comes following its foray into the B2B SME lending space with the launch of Razorpay Capital in 2019. Razorpay Capital offers instant settlements and business loans.
TERA Finlabs uses its AI-based risk-tech SaaS platform to help new-age consumer tech and FinTech companies deploy and scale embedded credit products with positive economics.
TERA will provide its entire technology stack, risk management capabilities, and onboarding solutions to create and enable a credit line for Razorpay's merchant network, the press statement said.
Harshil Mathur, CEO and Co-Founder, Razorpay said, “In India, banks are wary of providing business loans to startups and new SMEs due to the risks attached to new revenue models of startups. Through our lending platform, Razorpay Capital, we have been striving to solve these cash flow challenges, making it easier for businesses to get finance and grow. And 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. The team at TERA FinLabs comes with exceptional domain knowledge in credit underwriting and risk management and we see immense value in TERA Finlabs core lending infrastructure capabilities. Together, we are looking forward to addressing newer working capital issues faced by MSMEs and soon create a major dent in the credit space in the next few years."
Pradeep Rathnam, Co-Founder and CEO, TERA Finlabs said, "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. We are excited that the strengths of Razorpay and TERA Finlabs are now coming together to ensure that small businesses are not
burdened by the short-term uncertainties. Our robust end-to-end platform will enable new businesses to build a scalable and profitable credit business."
Prior to this, Razorpay acquired Thirdwatch (an Artificial Intelligence-driven company that helps reduce Return-to-Origin (RTO) fraud losses in e-commerce) in 2018 and Opfin (a payroll management software company) in 2019.
Razorpay says it has been witnessing a 40-45% growth, month-on-month. The company has achieved $40 Bn TPV (Total Payment Volume). Razorpay currently powers payments for over 8 Mn businesses including the likes of Facebook, Airtel, Ola, Zomato, Swiggy, Cred, ICICI Prudential among others and says it is set to reach 200 million customers by 2021.