Razorpay acquires loan company TERA Finlabs; strengthens the MSME game

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BANGALORE: Razorpay announced Monday its acquisition of TERA Finlabs, an AI-based risk technology SaaS platform, for an undisclosed amount. TERA Finlabs is a Bengaluru-based startup that provides technology, risk and capital solutions to enable corporate finance solutions. TERA Finlabs is an Indian subsidiary of GAIN Credit, a UK digital lender launched in 2018.

Amid last year’s struggles, small businesses have struggled to organize short-term financing to meet expenses as their lenders have reacted cautiously. During the foreclosure, Razorpay launched loan products such as cash and cash advance solutions with instant settlements aimed at helping SMEs solve their cash flow issues.

This acquisition of TERA Finlabs is aligned with Razorpay’s strategy of financially supporting as many MSMEs as possible by developing core competencies in capital solutions, credit underwriting and data-driven risk management capabilities. TERA will provide its entire technology stack, risk management capabilities and integration solutions to create and activate a line of credit for Razorpay’s merchant network.

TERA Finlabs offers personalized credit products with the goal of making consumer loans affordable for clients and profitable for lenders. Razorpay Capital and the technological capabilities of TERA Finlab will be able to meet the credit needs of more than 10,000 companies in India by next year.

Harshil Mathur, CEO and co-founder of Razorpay, said in a statement: “In India, banks are reluctant to provide business loans to startups and new SMEs due to the risks associated with new startup income models. Through Razorpay Capital, we strive to resolve these cash flow issues, making it easier to obtain financing and grow businesses. And moving forward, an acquisition like this fits perfectly with our vision to develop affordable, bespoke lending solutions for small, underbanked businesses in all industries so they can transform and disrupt digitally. Together, we look forward to solving the new working capital issues facing MSMEs and soon creating a major breach in the credit space in the coming years. ”

Pradeep Rathnam, co-founder and CEO of TERA Finlabs, said in a statement: “MSMEs have long been an underserved market. However, over the past 16 months, they have started to show rapid growth with their digital adoption. And that has created an opportunity for significant disruption in the lending industry – Integrated credit is one of those innovations that I’m sure will transform this space. There could not have been a better time than now to partner with Razorpay and its technological capabilities to support the MSME segment. ”

This is Razorpay’s third acquisition and follows its foray into the B2B SME lending space with the launch of Razorpay Capital in 2019.

Prior to that, Razorpay acquired Thirdwatch (an artificial intelligence-based company that helps reduce return-to-origin (RTO) fraud losses in e-commerce) in 2018 and Opfin (a management software company payroll) in 2019.


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