The unicorn industry in India seems to be blooming like the spring every year. The total number of unicorns in India, currently, stands at 21, which are valued at $73.2 billion. The magical avenue of rapidly growing Indian unicorns is majorly spread across the e-commerce industry and the fintech industry.
One such rising star of the fintech unicorns is the payments platform Bill Desk.
Payments company Bill Desk achieved unicorn status in 2018. The company reached this milestone in 2018. It was the 16th company in India to achieve this status. This startup is one of the biggest payment gateways present in India, and it has the largest list of business clients, and it operates around 50-60% of the total payments in the country. During 2020, the company has been in the news quite a lot as it has been trying to sell off its entire business. Why is that the case?
Before answering this question, however, let’s take a look at all the other details about this startup.
Business Model of Bill Desk
When the world of online financing and banking did not exist, people had to take out time from their days and work, to go pay various bills in the bank or to the utility provider. This took quite a lot of effort and time. Then came the advent of online payments and net banking which gradually made all these processes hassle-free.
Bill Desk is one such service that provides a solution to all these problems. From storing the bills online, on the internet instead of keeping physical copies, to having an entirely automated process for payment of bills, Bill Desk facilitates easier transactions. One can use this platform to make any kind of payments, at any time and from anywhere.
The company provides back-end support and infrastructure to many businesses like retail e-commerce websites. It enables these businesses to accept online payments through BillDesk’s payment gateway.
The payments are processed irrespective of the mode of payment, which can be through credit cards or debit cards, e-wallets or UPI. It provides assistance to these businesses by reducing the processing fees charged and improving the presentation of bills. This, in turns, helps bankers and businesses in improving the customer service that they provide.
Bill desk helps customers to organise, manage and make payments for any regular or recurring bills that they might have. Customers can also go back and review all their payments, in addition to receiving and paying through this gateway. This has provided the customers with a safer, quicker and more efficient way of doing financial transactions.
The platform is used by many Indian organisations, companies and banks. This includes companies in the industry of telecom, insurance, e-commerce, financial services, charity organisations and many entertainment providers.
BillDesk provides a platform for various online and mobile payments that can be made through aggregator platforms in India.
How did Bill Desk Start?
Bill Desk was founded in 2000 by M.N. Srinivasu, Ajay Kaushal and Karthik Ganapathy. Back then, all three of them were employed in the American accounting firm, Arthur Anderson. They quit their jobs to start their own company.
During that time, people had to stand in long queues to pay any bills, be it phone bills or electricity bills. This gave the founders an idea of a convenient payment platform, who then decided to do something to make this process simple and more convenient with the help of an online platform and this is how they started out with their company.
Funding of the Company
Bill Desk raised the value of $84.85 million in 2019, which led it to be valued at over $1 billion. Visa led the funding round with $75.63 million, and Temasek Holdings contributed the rest of the amount.
This raised the company’s valuation to $1.53 billion. Visa wanted to pick up a minority stake in the company so that it could expand its footprint in India as well.
In 2015, the company had raised an amount of Rs. 620 crore, which was led by the US private equity firm General Atlantic. General Atlantic was also joined by Temasek in this funding round. Billdesk’s valuation increased to $583.67 million.
Other than this, the company is backed up by companies like TA Associates, Clearstone Venture Partners, Temasek, Visa and General Atlantic.
Growth and Competition
The company operates in the fintech industry and faces stiff competition from some other players in the industry. Some of the competitors of Billdesk include other bill aggregators like RazorPay, CC Avenue, Oxigen and Citrus Payment Solutions.
For the year 2017-18, the startup saw a rise in profit (consolidated) to Rs.149 crore from a profit amount of Rs.138 crore. The revenue for the consolidated statements saw an increase from Rs. 899.7 crore to Rs. 1102.8 crore which would be an increase of 22.6%. Along with revenue, even the total expenditure saw an increase from Rs. 772.7 crore to Rs. 943.7 crore.
However, one thing to notice was that the growth rate for both net profit and sales had decreased since the previous financial year of 2016-17. Last year the sales saw a growth of 71%, while the profit had seen an increase of 120%.
What is happening currently?
During the start of July 2020, BillDesk was looking at opportunities in the market so that it could sell its business. The company had tried selling their business two years ago as well but were unable to do so. So this year they made another attempt.
But, BillDesk is the company that attracts major clients in India. It handles about 50-60% of the billing transactions. It is something that other competitors would also want to have. Then why exactly does BillDesk want to sell off its business?
Due to the intense competition that is present in this segment, it is only expected to increase. It is due to this competition in the digital payments segment that it is essential for companies to create an integrated payment system.
For these reasons, the promoters of BillDesk want to exit the industry by selling off their stakes in it. They are also talking to different investment bankers including Goldman Sachs, JP Morgan, Morgan Stanley, etc. Apart from that, the company is also in talks with big payment companies like PayU, PayPal and American Express and is seeking a valuation of about $1.5-2 billion.
Some of the reasons why BillDesk wants to sell off its business is because there have been stricter regulations and now the payment gateways and aggregators have come under the scrutiny of RBI. Due to this, the commissions for such aggregators have reduced. Also, the demand for such gateways has been on the rise continuously, and the need for a fully integrated system has been realised by BillDesk because it still remains just a payment gateway. Most investors are thus, also being pulled towards companies that offer more front end services for their customers.
It is primarily because of these reasons that BillDesk wants to sell off its business, and it wants to do so quickly. It’s the previous attempt of selling the company also did not realise as there was a difference in valuations; however, the unicorn is trying to do so again. Whether it will materialise or not, only time will telll.