The next unicorn that India can produce will be, probably, from the FinTech space. The reason being the increasing demand of e-wallets and FinTech post demonetisation. PayTm being the biggest benefactor emerged as a unicorn early this year. PayTm is followed by another FinTech start-up MobiKwik, providing e-wallet services.
MobiKwik was started in 2009, by Bipin Preet Singh and Upasana Taku. The mobile wallet has partnered with businesses like Café Coffee Day, PVR, Domino’s Pizza, Pizza Hut, eBay, Jabong, Snapdeal, HomeShop18 among others. MobiKwik claims to have over 55 Million users and 1.5 Million retailers on its platform. In May 2016, MobiKwik was estimated to be valued at around $500 million. Its current shareholders include Sequoia Capital, Tree Line Asia, American Express, Cisco Investments, GMO Payment Gateway, and MediaTek, as well as Bipin Preet Singh and Upasana Taku, the founders and executive officers.
With transactions and user base growing significantly, and taking into consideration the current Indian economy, the company is more than likely going to raise another round of funding to scale up, which might take the valuation to a billion dollars. Earlier this year, MobiKwik announced that it has close to 55 million consumers transacting on its platform, with a base of 15 lakh active merchants across categories. Calling their offline push relatively new, the company stated that offline merchants including names like Big Bazaar, Burger King, and Pizza Hut, contributed to 10 percent of the its entire revenues. Moreover, the firm is optimistic that by calendar year 2018, this ratio would increase, with offline merchants contributing to more than 50 percent of the company’s entire revenue.
While the wallet remains predominantly free for customers, the company can levy anywhere between two to four percent on merchants for every transaction. Post demonetisation the company disclosed that the demonetisation helped them add close to 35 million new users, as well as surpass a GMV of $2 billion. MobiKwik is in talks to raise a fresh round of $100 Million-$150 Million and this new round will take its valuation to $1 Billion, making it a Unicorn. Its close rival Paytm is already a Unicorn and is currently valued at over $7 Billion. The company plans at investing about $45 Million for acquiring and growing customer and merchant base. The funds will also be used towards increasing the number of MobiKwik offices from 6 to 20. The firm also stated that MobiKwik has opened offices in four more cities — Mumbai, Pune, Bengaluru, and Kolkata — and is eyeing Chennai for expansion as well.
Gurugram-based MobiKwik chiefly competes in the digital payments space with entities such as Paytm, FreeCharge, Oxigen Wallet, Citrus Pay, and PayU India. Space has seen considerable action after the demonetisation drive announced by the Indian Government in November 2016. This action has come in the form of more users adopting digital payments – in the case of Paytm declaring 200 Million users and counting in February 2017.
MobiKwik too saw an uptick in their user transactions too. MobiKwik had announced a 40% increase in app downloads, in less than 18 hours of the original demonetisation announcement. User traffic and merchant queries too went up by about 200% among its users. With the proposed funding round, MobiKwik will look to enter that most hallowed of all start-up clubs: The Unicorn Club. MobiKwik would be India’s 12th unicorn overall and second in the pure-play online payments space, after Paytm.
Now we come to the digital payments unicorn, Paytm, which has gone from strength to strength in the last few months. CEO Vijay Shekhar Sharma entered the Forbes billionaires’ club, and its employees too have profited handsomely off selling ESOPs. Apart from the fundraising and acquisition talks, it is necessary to note that Paytm is now modelling a full-fledged ecommerce mall and payments bank along with its core business model – the digital payment wallet. The online payments business in India has an immense scope. According to Indian IT Minister Ravi Shankar Prasad, the digital payments space in India has the potential to reach $50 Billion by 2022. With this much potential market share on the line, it remains to be seen whether the strengthening of the MobiKwik war chest is enough for the company to take on well-funded and well-oiled behemoths like Paytm and Amazon.
Meanwhile, arch nemesis Paytm is still lording over the space, claiming a user base of 218 million users. MobiKwik may soon be a unicorn in its own right, but there’s still a long way to go in its battle for supremacy in the market.
Taranjeet Singh, College of Technology,Pantnagar