Founder-CEO Ashneer Grover on why BharatPe chose not to be a unicorn, for now 

BharatPe founder and chief executive officer Ashneer Grover.

The unicorn tag is much coveted in the startup world but not everyone is hankering for the label that comes after a company is valued at $1 billion dollar or more. Ashneer Grover, the founder and chief executive officer of fintech firm BharatPe, which lends money to merchants and recently raised $108 million, is one of them.

The 38-year-old former investment banker says he refused much larger cheques to settle for $108 million, $900 million valuation and a soonicorn status as his two-year-old company has a long way to go and he didn’t want to think “we have arrived”.

With too much capital, companies start to loosen their purse strings, says Grover in an interview to Moneycontrol’s Priyanka Sahay. Grover also talks about BharatPe’s proposal to the Reserve Bank of India to acquire the beleaguered Punjab and Maharashtra Cooperative Bank and his plans for the new entity. Edited excerpts:

$18 million is split between angels and ESOP holders. We had 21 individual angels. After this round, 12 of them will be exiting fully. So, we would be left with nine angels on the cap table. On the ESOPs, roughly $1.6 million worth of liquidation is being given to the ESOP holders; essentially everyone who has vested shares will be participating. The number is 22. Minimum any guy would be getting is Rs 13.5 lakh and maximum Rs 1.5 crore.

This includes everyone from CXO level to the first employee we would have got... across finance, operations. So anyone who was offered ESOP and had vested ESOPs will get this.

Not at all. It is the other way round. I could have easily become a unicorn. I could have raised more money or even could have asked for a higher valuation either of which could have got me to the unicorn club. Here's the realisation—we have had a great run but all said and done, we are still a two-year-old company. The way outsiders behave with you, the way employees behave everything somehow gets driven by the perception. So I never want us to be perceived as a company that has established something already or is already set because there is a lot to do.

I just wanted to ensure that we don't get into the trap where we start thinking of ourselves as have ‘arrived' in any form, that's why becoming a unicorn was clearly not an option. I didn't want either the external perception of us to change or the employee perception of themselves to change.

So I never want us to be perceived as a company which has established something already or is already set because there is a lot to do.

-Ashneer Grover

It does. You start getting clubbed with companies which are much bigger like Paytm, PhonePe and RazorPays of the world. I genuinely don't believe we are there as yet. We have achieved great things in two years but there's a lot that needs to be done. So I don't want any clubbing of our company with these companies which have been around for 10 years, have seen multiple cycles.

Exactly, I do not want to take names but there are at least eight big investors, I ended up saying no to. Some of them were willing to write $100 million cheques individually. Availability of capital was not an issue at all. It is just about being disciplined. Once you raise too much money, you loosen your purse strings. We have built the business, so far, by just raising $60 million in two years, which is the lowest any payment company has spent to achieve the kind of scale we have.

On the POS machine, we do a TPC of roughly about $1.5 billion. We need to raise it to $7-8 billion in the next two years. On the QR, we want to increase it from $7 billion to $21-22 billion in the next two years. On the lending side, we want to build a $700-million loan book. That's where we are sort of in terms of the plan. That has not changed. In fact, the fundraise was driven by the plan, not the other way round.

Availability of capital was not an issue at all. It is just about being disciplined.

-Ashneer Grover

Nothing has been going wrong. We applied for a licence in August 2019. Everything was perfectly fine with our application. It is just that the RBI changed its plan from Mauritius as a country. It is an industry-wide issue, not just an issue specific to us. Anyone who has money through Mauritius, the government is right now not looking at those entities. It is true for CRED, Jupiter ...

We have made the final bid along with Centrum. So now the ball is in the RBI's court. RBI has to invite us for discussion. The application was made on February 1.  Now RBI will get back to us. Our work is done. We have the intent. We have the capital. Between Centrum and us we also have the credentials. Jaspal Bindra at Centrum was the head of Standard Chartered. He is a very well-known personality among the RBI circle. We are extremely well-positioned. Now it is for the government and the RBI to decide what is the path they want to take.

At the end of the day we are building a lending business. So every lending business needs a balance sheet. It brings the ability for us to raise deposits and public deposits, which is the cheapest source of capital for lending. It lowers the cost of capital from a lending perspective. More importantly what we will do is that we will make it a purely digital bank because it would be the first bank with fin-tech as the management.

Our endeavour would be to build APIs (applications programming interface) and give APIs to other fintechs. We will make it the default bank for all fintechs to work with.

My sense is that RBI would want a solution either way by March 31.

No, see I have done acquisitions all my life. I was an investment banker. I am very very clear that very few acquisitions actually make economic sense. Now it's not like just because we have money we will go after anything and everything in the market. So nothing else as of now. PMC is all we are looking at.

If you manage to get PMC, then you won't need the NBFC licence.

Then the NBFC licence might not be necessarily required because we will have a much superior licence, which is the banking licence.

These are all hypothetical things. We can't make a plan on something which has not happened. If PMC happens, at least one year will go into making sure that the bank gets back into shape. And from there on, we will see what model makes sense.