PhonePe raises another $100 mn from General Atlantic at $12 bn valuation

Walmart Inc-owned payments company PhonePe has raised $100 million in another funding round from New York-based growth equity firm General Atlantic and other investors. The current investment comes three months after General Atlantic infused $350 million in the Indian fintech startup.

With the latest funding round, PhonePe has raised a total of $750 million of the targetted $1 billion in its efforts to expand the lucrative lending business. This is PhonePe's fourth funding round this year alone, following its domicile shift to India last year. Just last month, PhonePe raised an additional $200 million in primary capital from Flipkart parent Walmart.

Before that in February, PhonePe raised $100 million in primary capital from Ribbit Capital, Tiger Global and TVS Capital Funds, at a pre-money valuation of $12 billion.

According to the company, it plans to deploy these funds to build and scale new businesses like insurance, wealth management, lending, stockbroking, ONDC-based shopping and account aggregators. "The fundraising will also help PhonePe turbo-charge the next wave of growth for UPI payments in India, including UPI lite and Credit on UPI."

In a separate development, PhonePe recently launched a new shopping app called “Pincode”, built on top of the ONDC network. With nearly 450 million registered users on the PhonePe app, the company has strategically opted to launch a new app instead of integrating it into the existing one. The app will focus on hyperlocal commerce and is now available for download on Google Play Store and App Store. Pincode is currently live only for customers in Bangalore and will launch in other cities very soon.

The Pincode app will promote local shopkeepers and sellers, and hopes to digitally connect each city’s consumers with all their neighbourhood stores that they usually buy from offline, with the convenience of online ordering, the startup says.

According to Phonepe, the foray into the e-commerce space under the ONDC umbrella is an opportunity that the company couldn't afford to miss, as ONDC expands the consumer base for a seller. The company looks to expand Pincode to the top 10 cities in the first year of its operation.

Like PhoenPe, despite global layoffs and macroeconomic headwinds, many domestic start-ups, including Lenskart, Mintify, Insurance Dekho, FreshtoHome foods, TI Clean Mobility and KreditBee, have collectively raised $2.8 billion in 301 rounds in the January to March period in 2023, according to the latest funding report by Traxcn.

However, this is a decline of over 75% year-on-year (YoY) as compared to $11.98 billion raised by domestic start-ups in 816 rounds in the same period last year. On a sequential basis, the domestic startup funding declined 21% against $3.7 billion raised in 347 funding rounds in Q4 of 2022.

Amongst sectors, fintech, retail and enterprise applications were the top-performing sectors in Q1 of FY23. In Q1 of 2023, the fintch segment witnessed a funding growth of 150% compared to Q4 of 2022. However, this is a drop of 51% compareed to Q1 of 2022.