EXCLUSIVE: Innoviti raises undisclosed sum in funding from FMO, Bessemer Ventures

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Merchant payments company Innoviti Payments has raised its series C round of funding from FMO-Entrepreneurial Development Bank, the Netherlands, and existing investor Bessemer Venture Partners from the US. It did not disclose the amount raised or the valuation at which the funding happened, but said they were looking for some more funds before closing this round.

“We are expecting this to be our last equity fundraise, we are aiming at cash positivity within the next six to eight months,” Rajeev Agrawal, chief executive officer, Innoviti Payments, told Moneycontrol. “Only if there is an inorganic acquisition opportunity will we consider another round.”

Till this round, the Bengaluru-headquartered company had raised $25 million and has investors like Catamaran Ventures, Bessemer Ventures and SBI-FMO on its cap table. It had raised Rs 80 crore in debt funding from Trifecta Capital and a few non-banking finance corporations last year. This round is all primary capital and had no secondary component, Agrawal said.

Innoviti deploys point of sales terminals for accepting digital payments on behalf of banks. It mostly targets mid- and large- scale retailers. It competes with players like Pine Labs, MSwipe, Ezetap and others.

Innoviti wants to become a software player which has deep integrations with merchants, offering them ways to digitise their business. The days of a simple QR code or a plain vanilla terminal are over, said Agrawal.

“We are looking to leverage wholesale distribution channels for sales to retail merchants, this will help us reduce our cost of customer acquisition and also improve utility of the terminals at the outlets,” he said. This can help Agrawal acquire new merchants at one-fourth of the original cost.

Innoviti currently processes $6.5 billion of gross payments volume annually through its terminals. It has deployed 80,000 terminals in more than 20,000 shops spread across more than 1000 locations.

Recently Innoviti published a report where they spoke about how local retailers are seeing faster sales recovery compared to organised retail in a post-COVID-19 scenario. The report added that smaller retailers were being able to adjust better than larger ones to local supply-side disruptions.

The digital payments business in India is a hyper-competitive space with a few extremely well-funded players vying for a larger market share. Pine Labs, which is a larger competitor to Innoviti, processes $30 billion of gross transactions annually. It counts investors like Mastercard, Temasek Holdings, Sequoia Capital and PayPal Ventures as its main investors.

Overall, the card payment companies compete with smartphone-based payment startups like Paytm, PhonePe, BharatPe and Google Pay. Innoviti has partnered with Google Pay for a UPI based payment offering. It also works with HDFC Bank for deploying BharatQR based payments solution at small merchant outlets.

“UPI is attractive for merchants and we are seeing increased traction on that side of the business,” said Agrawal.