Cashfree, an Indian startup that offers a wide-range of payments services to businesses, has raised $35.3 million in a new financing round as the profitable firm looks to broaden its offering.
The Bangalore-based startup’s Series B was led by London-headquartered private equity firm Apis Partners (which invested through its Growth Fund II), with participation from existing investors Y Combinator and Smilegate Investments. The new round brings the startup’s to-date raise to $42 million.
Cashfree kickstarted its journey in 2015 as a solution for restaurants in Bangalore that needed an efficient way for their delivery personnel to collect cash from customers.
Akash Sinha and Reeju Datta, the founders of Cashfree, did not have any prior experience with payments. When their merchants asked if they could build a service to accept payments online, the founders quickly realized that Cashfree could serve a wider purpose.
In the early days, Cashfree also struggled to court investors, many of whom did not think a payments processing firm could grow big — and do so fast enough. But the startup’s fate changed after Y Combinator accepted its application, even though the founders had missed the deadline and couldn’t arrive to join the batch on time. Y Combinator later financed Cashfree’s seed round.
Fast-forward five years, Cashfree today offers more than a dozen products and services and helps over 55,000 businesses disburse salary to employees, accept payments online, set up recurring payments and settle marketplace commissions.
Some of its customers include financial services startup Cred, online grocer BigBasket, food delivery platform Zomato, insurers HDFC Ergo and Acko and travel ticketing service provider Ixigo. The startup works with several banks and also offers integrations with platforms such as Shopify, PayPal and Amazon Pay.
Based on its offerings, Cashfree today competes with scores of startups, but it has an edge — if not many. Cashfree has been profitable for the past three years, Sinha, who serves as the startup’s chief executive, told TechCrunch in an interview.
“Cashfree has maintained a leadership position in this space and is now going through a period of rapid growth fuelled by the development of unique and innovative products that serve the needs of its customers,” Udayan Goyal, co-founder and a managing partner at Apis, said in a statement.
The startup processed over $12 billion in payments volumes in the financial year that ended in March. Sinha said part of the fresh fund will be deployed in R&D so that Cashfree can scale its technology stack and build more services, including those that can digitize more offline payments for its clients.
Cashfree is also working on building cross-border payments solutions to explore opportunities in emerging markets, he said.
“We still see payments as an evolving industry with its own challenges and we would be investing in next-gen payments as well as banking tech to make payments processing easier and more reliable. With the solid foundation of in-house technologies, tech-driven processes and in-depth industry knowledge, we are confident of growing Cashfree to be the leader in the payments space in India and internationally,” he said.
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