PhonePe Raises 100 Million in New Funding at 12 Billion Valuation

PhonePe has just secured a massive 100 million dollars in new funding, bringing its valuation to a staggering 12 billion dollars. This is a huge milestone for the company, and a testament to its growing popularity and influence in the Indian fintech space.

The funding round is expected to help PhonePe further expand its reach and offerings, potentially even exploring new markets and opportunities. As the company continues to grow and evolve, it's exciting to think about what the future holds.

PhonePe's valuation has now more than doubled in just a few months, a clear indication of its rapid growth and success. This is a huge vote of confidence in the company's vision and leadership.

PhonePe has raised $100 million in additional funding at a $12 billion valuation. This investment comes from Ribbit Capital, Tiger Global, and TVS Capital Funds.

The funding is a significant milestone for PhonePe, which started its latest fundraising with a target of raising up to $1 billion in capital. PhonePe has already raised $450 million within six weeks from leading investors.

PhonePe plans to deploy these funds to scale up its Payments and Insurance businesses in India, as well as to launch and aggressively scale new businesses like Lending, Stockbroking, ONDC-based Shopping, and Account Aggregators over the next few years.

PhonePe's CEO and Founder, Sameer Nigam, expressed gratitude towards the investors, stating that they are privileged to have a great set of leading global investors who believe in their mission.

PhonePe operates on a combined B2B and B2C business model in the digital payments and financial services sectors. This allows the company to cater to both consumers and merchants.

On the consumer side, PhonePe offers a digital payment platform that allows users to make seamless transactions using their smartphones. Users can link their bank accounts, debit cards, and credit cards to the PhonePe app, enabling them to make payments, transfer money, recharge mobile phones, pay bills, and more.

PhonePe provides a user-friendly interface and a secure platform for convenient and efficient financial transactions. This is evident from the fact that PhonePe has obtained a license from the RBI (Reserve Bank of India) to provide services related to money transactions and payment systems in India.

PhonePe also caters to merchants by providing them with payment solutions and tools to accept digital payments. Merchants can use the PhonePe app or integrate PhonePe's payment gateway into their own applications or websites.

Here are some of the key services offered by PhonePe to merchants:

PhonePe's business model is designed to be comprehensive, offering a wide range of services beyond traditional banking transactions. These services include Pre-Paid Instruments, Gift cards, Payment gateways, Recharges and Bill Payments, Insurance, Mutual Funds, Gold sales, and purchases, and switch interfaces and access.

PhonePe has solidified its standing in the market, leading the way in terms of both value and volume for UPI transactions.

The digital payments market in India is projected to grow by 11.56% from 2024 to 2028, reaching a market volume of $394.40 billion in 2028.

PhonePe, along with Google Pay and Paytm, collectively account for nearly 96% of all UPI transactions by value in March.

With over 400M registered users and having digitised over 35M offline retailers, PhonePe is making significant strides in the industry.

The company is now free to operate independently after splitting from Flipkart, with whom it was acquired in 2016.

The digital payments market in India is projected to grow by 11.56% from 2024 to 2028, resulting in a market volume of US$394.40 billion in 2028.

PhonePe, along with Google Pay and Paytm, dominated the market, collectively accounting for nearly 96% of all UPI transactions by value in March.

PhonePe led the market in terms of both value and volume for UPI transactions, solidifying its standing in the market.

India's payments market is expected to be worth $1T in the next two to three years, up from around $200B in 2020.

PhonePe has over 400M registered users, and has digitised over 35M offline retailers scattered over Tier II, III, and IV cities and beyond, covering 99% of the country’s pin codes.

The company's expansion plans include growing its payments and insurance operations in India, as well as establishing and rapidly developing new companies such as lending, stockbroking, and account aggregators.

ICICI Bank blocked PhonePe transactions on January 14, 2017, due to non-compliance with NPCI guidelines.

The NPCI initially instructed ICICI to allow UPI transactions via PhonePe on January 19, 2017.

Airtel also blocked PhonePe transactions on its platforms during the same period.

PhonePe resolved the issues with ICICI and Airtel by February 2017.

PhonePe closed its operations on Flipkart's website to align itself with the updated NPCI verdict.

PhonePe's financials have been on the rise, with its operating revenue growing by 74% in 2024 to INR 5,064 crore. This significant increase is a testament to the company's expanding user base and growing popularity.

In 2023, PhonePe's operating revenue was INR 2,914 crore, a 77% growth from the previous year's INR 1,646 crore. This rapid growth is a clear indicator of the company's successful business model.

PhonePe's total expenses also saw a notable increase, rising by 31% from INR 5,907 crore in 2023 to INR 7,756 crore in 2024. Despite this, the company was able to reduce its losses by 29%, with a loss of INR 1,996 crore in 2024 compared to INR 2,795 crore in 2023.

PhonePe's EBITDA for the payment segment stood at negative INR 1,755 crore in FY23, which is an improvement from the negative INR 1,622 crore in FY22.

PhonePe's merchant lending platform is a game-changer for small and medium enterprises (SMEs). It allows banks and non-banking financial companies (NBFCs) to provide credit digitally and seamlessly to SMEs.

The platform leverages PhonePe's extensive base of over 35 million merchants. This enables SMEs to experience a streamlined and quick loan approval process.

Through the PhonePe for Business app, SMEs can access credit for their growth and development. This is a huge advantage for businesses that need timely access to credit.

PhonePe's financials have been a subject of interest in recent times. The company's operating revenue grew by 74% to INR 5,064 crore in 2024, up from INR 2,914 crore in 2023.

Total expenses also increased by 31% from INR 5,907 crore in 2023 to INR 7,756 crore in 2024. This significant jump in expenses was accompanied by a reduction in losses, with PhonePe reporting a loss of INR 1,996 crore in 2024 compared to INR 2,795 crore in 2023.

PhonePe's revenue growth is not a new phenomenon, as the company witnessed a 77% surge to INR 2,914 crore in FY23 from INR 1,646 crore in FY22.

Here's a summary of PhonePe's financials in 2023 and 2024:

PhonePe's EBITDA for the payment segment stood at negative INR 1,755 crore in FY23, whereas in FY22 it was negative INR 1,622 crore.

PhonePe's investors contributed approximately Rs 8,000 crore in taxes to facilitate the company's domicile shift from Singapore to India.

This significant financial contribution played a vital role in aligning PhonePe's operations with the regulatory framework in India.

The process of shifting domicile was a major challenge for PhonePe, but with the help of its investors, the company was able to overcome it.

PhonePe offers ESOPs to its full-time employees, a benefit that 75% of its workforce can enjoy if they've completed at least one year of service.

In November 2021, the company conducted a buyback of ESOPs worth Rs 135 crores, a significant investment in its employees.

Eligible employees will also receive a one-time cash payout from a $700 million employee stock option (ESOP) buyback conducted by Flipkart, as part of the separation from the company.