Razorpay acquires TERA Finlabs; bags third firm in less than 3 years

 TERA Finlabs is a Bengaluru-based startup that provides technology, risk, and capital solutions.

Fintech startup Razorpay on Monday said it has acquired TERA Finlabs, a Bengaluru-based startup that provides technology, risk, and capital solutions to enable embedded financing solutions for businesses.

TERA Finlabs is an Indian subsidiary of a UK-based digital lender, GAIN Credit.

The company, however, did not disclose the financial details of the transaction.

"This acquisition of TERA Finlabs is aligned with Razorpay's strategy of financially supporting as many MSMEs as possible by building core competencies in capital solutions, credit underwriting, and data-driven risk management capabilities.

"TERA will provide its entire technology stack, risk management capabilities, and onboarding solutions to create and enable a credit line for Razorpay's merchant network," a statement said.

Razorpay Capital along with TERA Finlab's technology capabilities will be able to service the credit needs of over 10,000 businesses in India by next year, the statement said.

Razorpay had forayed into the business-to-business (B2B) small and medium-sized enterprises (SME) lending space with the launch of Razorpay Capital in 2019.

This is Razorpay's third acquisition in less than three years. Previously, Razorpay had acquired Thirdwatch - an Artificial Intelligence-driven company that helps reduce Return-to-Origin or RTO fraud losses in e-commerce - in 2018, and Opfin - a payroll management software company - in 2019.

Razorpay CEO and co-founder Harshil Mathur said in India, banks are wary of providing business loans to startups and new SMEs due to the risks attached to new revenue models of startups.