With an objective of further bolstering India’s startup ecosystem, RazorpayX, the business banking platform of Razorpay, has forayed into a new product line – Forex Service for Startups.
What is Forex Service for Startups?
100% compliant with regulatory requirements, this new service will empower Indian startups to seamlessly transfer the funds they have raised globally to India. Within 3 months of its beta launch, the service has enabled over 15 startups including Virohan, Tortoise, Coupl across edtech, fintech, and financial services sectors respectively to name a few, who used the service to bring crores to India translating to INR 350 Cr annualised run rate.
The company believes that the forex service has the potential to impact and benefit over 1000 startups that are likely to raise foreign funding this year.
Presently, Forex Transfers in India catering towards startup funding are riddled with several gaps. The process is expensive, slow, and complicated, involving multiple compliance paperwork with poor visibility on progress, eventually taking up over 2 months in addition to a hefty late submission fee which compounds with each day of delay. For instance, if a founder raises $10mn in funding, the compounding late fee will cost them upwards of INR 20,000 at least with every passing month.
As per Razorpay’s research, 8 out of 10 founders discovered that they could have received a better forex rate. In addition to Forex rates, around 2-4% of the funding amount sometimes gets leaked in administration fees and conversion charges as per VCs. To put things in perspective, for a $10 Mn funding inflow at INR 80/USD vs INR 79.8/USD which is a 20 paise difference in forex rates results in a potential loss of INR 20 Lakhs for a startup when converted. Clubbed with additional administrative costs that may be incurred, the potential total cost of bringing funds to India climbs even higher for a startup.
Commenting on the industry-first move by the company, Rahul Kothari, Chief Business Officer, Razorpay said, “India has become one of the most attractive investment destinations globally over the years, resulting in a 20-fold jump in FDI inflows since 2003-04. However, owing to the complex processes involved, the majority of the inflow is restricted to a handful of companies who can navigate through the long and expensive compliance processes. Through our conversation with over 50 founders and several global investors, we realized that to increase the leverage of foreign funds for the Indian startup ecosystem, we needed to solve for the trifecta of dense paperwork, compliance and burgeoning costs. Our aim therefore was to foray into a new segment and create a solution that would help democratize foreign funds for startups of all sizes and enable them with limitless possibilities to grow tremendously. With an annualised run rate of INR 350 Cr under this Forex service so far, we expect this service to scale up by 3-4X in the next financial year.”
RazorpayX Forex Service is in line with the business banking platform’s mission towards making business-banking easy and seamless for startups in India so that they can focus on their core business. Enabled with the help of its existing partner banks like RBL Bank and other leading banks, the process is now cost-effective, transparent, and faster via a seamless single window offering. The service extends competitive forex rates, and has no hidden costs. With dedicated forex experts who are specialized in working with startups, the process is made simple and seamless due to automated paperwork.
The vibrancy of the Indian startup ecosystem calls for innovative offerings that will foster the growth of the community. RazorpayX aims to address the pain points faced by businesses and their founders by extending services that ease complexities. This has enabled startups to have access to transparent, seamless experiences through future-forward neobanking solutions.
(Disclaimer: TICE news did not write this content. It is based on a press release sent by the company or the organisation.)