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India’s home grown digital payment company Paytm is engaged in discussion with T Rowe Price to raise nearly $1 Bn, according to Economic Times (ET) report. ET’s report claims that T Rowe Price is planning to invest $150 – 200 Mn while existing investors Alibaba and SoftBank will pump rest of the amount in the funding round.
The upcoming funding round is likely to propel Noida based company’s market valuation to $13 – 15 bn. ET claims that the total funding amount has been slashed by almost $2 Bn – trimming it from $3 Bn to 1 Bn.
The report of upcoming funding has come at a time when Paytm’s balance sheet is facing severe stress. It reported massive net loss of 3,959.6 for FY 19, a quantum jump from loss of Rs 1,490 recorded in the last year. Vijay Shekhar Sharma led Paytm is also facing immense heat owing to its declining market share in the UPI payment space, with Google Pay and Flipkart’s PhonePe breathing down its neck.
Noida based company’s e-commerce bet is also failing to fire with Paytm Mall struggling amid declining market share. Today its e-commerce arm is nowhere in the horizon to catch up with Flipkart and Amazon – the two big boys of India’s e-commerce industry.
But Sharma has stressed in a recent media interaction that the company will eventually become profitable in the coming years. The young entrepreneur also spoke about the potential IPO that is likely to hit the market in the next 2-3 years.
With potential IPO in the sight, Paytm will have to work all the more hard to streamline the balance sheet and ensure that its public issue gets a thumping response from investors. Sharma will be up for this task amid the growing chorus that fund guzzling start ups are not based on sustainable revenue model.
Much of this chorus is thanks to WeWork’s recent IPO botch and U.S market’s lackluster response to Uber’s public issue.
Sharma’s efforts to turn around will be closely watched by the industry as probably nothing will help to consolidate India’s startup ecosystem more than a successful IPO launch by one of India’s high profile startups. Until then the well-wishers of Indian startup ecosystem will have to keep their fingers crossed.
