Alibaba-backed Indian payments startup Paytm has announced its intention to drop $764 million into an aggressive expansion plan over the next three years to capture the crown as India's largest eCommerce player.
Paytm is fresh off a September funding round that saw it snap up $680 million in funding from Chinese eCommerce mega-player Alibaba and its affiliate, Ant Financial. After the funds were raised, Paytm clocked in with a $2.5 billion valuation, making it among the most valuable startups in India.
Plans for the funding include upping the number of merchants on the Paytm marketplace from 100,000 today to 1 million by 2018. The firm is also looking to expand its payments service into a full-tilt FinServ outfit with a banking license issued by the Reserve Bank of India. When that is complete, the firm plans to seek an IPO.
“We believe that we’ll be able to bring half a billion Indians into the mainstream of the economy. Alibaba have done it in China, and with their help, we can do it here,” Founder Vijay Sharma said.
“We are talking about a couple more years of 100 percent or more year-on-year growth, but once this has settled down and become more predictable, we would like to go public,” he added.
Paytm now steps into a competition in earnest as one of India's eCommerce Big Four alongside hometown heroes Flipkart and Snapdeal, as well as U.S.-based entrant to the market Amazon.
Paytm, at present, is about the same size as Amazon in India but smaller than its two locally based rivals.
Unlike its rivals, Paytm is not a pure eCommerce play, instead taking a page from the Alibaba strategy book and focusing on a heterogeneous model that focuses on sales, payments and consumer services (banking, insurance, etc). It is also a single investor player, whereas Snapdeal and Flipkart have both raised capital widely around the world.
“We do not have investors seeking an exit, so we can play the long game,” Sharma said. “While these three companies [Amazon, Flipkart and Snapdeal] are fighting over who can sell the most smartphones, we will have a different model.”
Paytm is also working with Alibaba to bring Chinese sellers to its Indian customers and to give Indian merchants access to global consumers through the Alibaba eCommerce sites.
“They [Alibaba] want a lot of Indian merchants to sell on the Alibaba platform,” Sharma said. “Jack [Ma] had said that when you find a spice trader from India and give them a new market in India online, and then Alibaba can extend the world market to them, then we will have it sorted.”
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