Razorpay unveils ESOP buyback sale for 650 staffers as part of $75 mn deal

This is the fintech unicorn's fourth and largest ESOP sale for existing and former employees, irrespective of ranks

Fintech unicorn Razorpay said it has launched its fourth and largest Employee Stock Ownership Plan (ESOP) sale for its 650 existing and former employees as part of a $75 million (Rs 578 Crore) transaction, irrespective of ranks. This is led by key investor Lightspeed Venture Partners, along with participation from Moore Strategic Ventures, who will subsequently join the company’s cap table. The move is in keeping in line with building an employee-centric workplace.

“Today, we take this opportunity to honour our team but really, the honour is Shashank’s  (Kumar, co-founder) and mine. The last two years have been challenging for each one of us, and despite the challenges, our (team) stuck together and collectively guided the company through massive growth,” said Harshil Mathur, CEO & co-founder, Razorpay. “I feel nothing but gratitude to see how every teammate in the company believes Razorpay to be their own family and sees it through every challenge. These ESOPs are a way to give back to our Razors and a small effort in making a difference in their lives.”

Last December, Bengaluru-based Razorpay raised $375 million in the Series F round of funding at a $7.5-billion valuation, making it India’s second-most valuable start-up in this space, after Paytm, which later went public. The company valuation surged over seven times in 15 months, helping it push Walmart-owned digital payments firm PhonePe to the third spot on the country’s most-valuable fintech list.

Razorpay competes with players such as Pine Labs, Paytm, PayU, BillDesk, CCAvenue and Cashfree Payments. ESOP sales in the startup industry have been a source of significant wealth creation for employees. But it is not something that companies usually practice as an annual event. It is also not something many companies extend to include eligible former employees at the same rate as existing employees.

Razorpay said it has created an industry benchmark by becoming one of India’s youngest startups to have facilitated the ESOP sale consecutively for the last three years.  Last year, the sale was worth $10 million (Rs 73 crore). This year, the company looks to benefit employees across roles – be it software engineers, product managers, customer experience agents, sales, and administrative staff. Current and former employees, as young as 22 who hold vested stocks of the company, will be eligible to sell up to 30 per cent of their vested ESOP shares.

Razorpay said it strongly believes that its employees are quintessential to the growth of the business. It said ESOP sales are one of the many tangible ways in which Razorpay extends its gratitude to its employees.

“In the last year, Razorpay grew over 300 per cent and we plan to achieve $90 billion TPV (Total Payment Volume) by the end of 2022 - thanks to the efforts of our Team, the significant digital adoption by small businesses who trusted us, and investors who believed in our vision and purpose,” said Mathur. “And towards building the financial ecosystem for millions of small and medium businesses, we are elated to add marquee tech investors - Lightspeed Venture Partners and Moore Strategic Ventures as partners in our journey.”

Razorpay has been on a rapid growth journey over the last few years and is progressing steadfastly in its journey of becoming India’s first full-stack financial solutions company. This year, Razorpay forayed into the international markets with the acquisition of Malaysian fintech firm Curlec and also closed its fifth acquisition by acquiring payment technology startup, iZealiant. Razorpay plans to increase its merchant count from 8 million to 10 million by 2022 and hopes for a year of significant growth in 2022, like the last two years.

“Razorpay is one of the most exciting companies in the payments and financial technology ecosystem today,” said Aditya Sharma, partner, growth equity, Lightspeed Ventures. “The company's growth has been shaped by their exceptional management team and industry-leading product innovation and engineering capability.”

Sharma said the company is pioneering solutions across neo-banking, SME payments, and workflow-related platforms while continuing to strengthen its leadership position in the enterprise segment. “We look forward to bringing in strong synergies and resources from across the global Lightspeed platform to serve Razorpay in the next phase of their growth journey,” said Sharma.

Razorpay conducted its first ESOP sale in November 2018, making it one of the very few early-stage startups to conduct a liquidity event for its 140 employees then. The second and third ESOP sales were conducted in November 2019 and March 2021, during which 400 and 750 employees respectively were eligible. To date, the company has awarded ESOPs to 1940 existing and former employees across levels.