RazorpayX, the business banking platform of fintech company Razorpay, on Monday announced its foray into a new product line called ‘Forex Service for Startups’.
With an annualised run rate of Rs 350 crore under this forex service to date, the company expects it to scale up by 3-4 times in the next financial year.
Currently, forex transfers in India towards startup funding are riddled with several gaps, 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 $10 million in funding, the compounding late fee will cost them upwards of Rs 20,000 at least with every passing month.
“Through our conversation with over 50 founders and several global investors, we realised 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,” said Rahul Kothari, Chief Business Officer, Razorpay.
Within 3 months of its beta launch, the service has enabled over 15 startups including Virohan, Tortoise, Coupl, to bring crores to India.
The company believes that the forex service has the potential to impact and benefit over 1,000 startups that are likely to raise foreign funding this year.
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 per cent of the funding amount sometimes gets leaked in administration fees and conversion charges as per VCs.