Pine Labs — the merchant payment solution startup launched in 1998 and last valued at reportedly $900 million around its $125 million fundraise in May 2018 — raised its recent round from Mastercard. The amount invested wasn't disclosed by the company however a source estimated it to be around $100 million. Nonetheless, it is not certain that the company has crossed the $1-billion hallowed mark to become India's newest unicorn and first in 2020. The company currently counts Flipkart, Temasek Holdings, PayPal Ventures, Sequoia India among its investors and competes with the likes of Razorpay, PayUMoney, Ezetap, MSwipe etc.
"We have to see how much dilution happened. If they gave 20 per cent or 15 per cent for $100 million, it may not touch the $1 billion mark. What could happen is that out of $100 million, $80 million they might have raised at a very high valuation and $20 million through a secondary deal at 25 per cent discount or something. Such things may be possible to hit $1 billion," a fintech investor told Financial Express Online. Crossing $1-billion mark would end Pine Labs’ 22-year long journey to the milestone. Another payment startup Bill Desk took 18 years to become a unicorn. It is currently valued at $1.8 billion, according to CB Insights.
Comments from Pine Labs on its valuation will be added to the story as and when received.
Even if the valuation has hit $1 billion, one may doubt it given the company hasn't announced turning a unicorn, something that all unicorns in the past have claimed publicly. "If they are not claiming that they are now a unicorn, then they are not becoming because unicorn means you will make the loudest noise for that. The company's previous round here won't matter if their growth numbers have not taken off and their dilution is higher even as it is also a question of who is willing to pay how much amount for how much stake. So they might have taken $100 million but if they have diluted 20 per cent or something, you may not turn unicorn," the investor added.
A PwC and Associated Chamber of Commerce of India report in May last year pegged the market for instalment-based payments on consumer goods in India will expand to$16.9 billion in 2021 and $52.5 billion in 2025 even as the market has grown significantly in the past two years. "The market has improved in the last two years. So their valuation can go up by 20-30 per cent. But it can go down as well. The payment industry has significantly grown, so crossing $1 billion is not unreasonable also," an industry expert told Financial Express Online. A 20 per cent increase in Pine Labs current valuation will push it beyond $1-billion mark.
Pine Labs was initially launched as card-based payments and loyalty solutions provider for the retail petroleum industry. However, it pivoted the business model in 2012 to offer a PoS platform to merchants as their "needs evolved," the company website reasoned for the pivot. Pine Labs has since then grown significantly to capture markets outside India including Southeast Asia and the Middle East. Currently, it processes $30 billion of payments annually and services around 1.4 lakh merchants across around 4.5 lakh network points, according to the company. "Together, we have a unique opportunity to use Mastercard's global presence and technology infrastructure to enhance our growth and enable us to meet the growing needs of customers in India and beyond," said Lokvir Kapoor, founder and chairman of Pine Labs.