Lightspeed, Moore Strategic Ventures invest in Razorpay's $75 million secondary share sale

Lightspeed Venture Partners and Moore Strategic Ventures have picked up stakes in digital payments firm Razorpay as part of a $75 million secondary share sale, the company said.

ET first reported on April 22 that venture capital firm Lightspeed Venture Partners, which has backed startups like Udaan, Byju’s and Oyo, among many others, was in the final stages of talks to invest in the Bengaluru-based unicorn. We also reported that other investors may join the funding round.

As reported earlier, this secondary share sale has also seen Razorpay’s early angel investors divesting their stakes in the firm. Razorpay was valued at $7.5 billion in December last year after a $375 million funding round. Sources said the secondary transaction has taken place at a valuation of around $6.5 billion. Secondary transactions typically happen at a discount compared to the most recent primary funding round. In a secondary share sale, existing investors, employees with stock options sell their shares to new investors and the money doesn’t go to the company.

Razorpay said about 650 current and former employees have sold their stock options as part of this share sale. According to the company, this is the fourth and biggest Esop (employee stock options programme) buyback since it started operations in 2014. Its previous Esop buyback was for $10 million in March 2021.

In a statement, Razorpay said it has enabled not only current but former employees to participate in this Esop buyback and has now conducted this exercise for the past three years. The staff share sale this year will involve software engineers, product managers, customer experience agents, sales, and administrative staff.

Eligible employees can sell 30% of their vested options. "These Esops are a way to give back to our Razors (company employees) and a small effort in making a difference in their lives," Harshil Mathur, cofounder and CEO, Razorpay, said.

He said in a statement that he was elated to onboard Lightspeed Venture Partners and Moore Strategic Ventures and that the company is building a financial ecosystem for millions of small and medium businesses.

“Razorpay is pioneering solutions across neo-banking, SME payments, and workflow-related platforms while continuing to strengthen its leadership position in the enterprise segment,” said Aditya Sharma, a partner (growth equity) at Lightspeed Venture Partners. He said the fund will look to bring in synergies and resources from across the global Lightspeed platform to serve Razorpay in its next phase of growth.

Founded by Mathur and Shashank Kumar, Razorpay is one of the highest-valued Indian fintech startups. In total, it has raised over $740 million from investors such as GIC, Tiger Global, Sequoia Capital and others.

The firm has also been making acquisitions in India and abroad. Its most recent buy was IZealiant Technologies in March. In February, it acquired Malaysian fintech firm Curlec.

Razorpay clocked an annual total payment volume (TPV) of $60 billion last calendar year and is aiming to hit $90 billion in 2022.