Investment Memos

Investing in Paytm

We are proud to continue the journey with India’s fintech behemoth


Team Elevation

18th November 2021

It was not just an investment

When Elevation first invested in One97 Communications Ltd, India was a very different place. Rahul Dravid still captained the Indian cricket team, having a ‘colour waala Nokia’ was still a status symbol for many, and stores in Delhi sold less than 10 units of the first 3G enabled iPhone on the day that it was released. Back then, if you would have told someone that in a mere 15 years everyone from your local kirana store to the auto waala bhaiyya will accept mobile payments and that you could pay most of your everyday bills online, they would have scoffed at you. And that’s what many people did when Vijay first outlined his vision for an India that would ‘Paytm karo’ every transaction. But Vijay being Vijay, he proved the naysayers wrong by spearheading the movement to bring India on one common payments platform. We couldn’t be more thrilled to have shared this ride with him...

What excited Ravi Adusumalli about Vijay, despite him not being the archetype of a typical founder, were his bold ideas, willingness to learn, and the hunger to execute. But most of all, Vijay’s energy and enthusiasm was unparalleled. He wanted to do the impossible. Things that went well beyond people’s imagination. And for us at Elevation, Vijay’s confidence made us feel like taking the leap of faith with him was the most obvious and natural thing to do. It isn’t surprising therefore that Ravi and Vijay have the sort of relationship co-founders share.

No one at Elevation could predict what this investment would lead to. But 14 years later, as Paytm has listed in India’s largest public offering ever, it all feels par for the course. It didn’t back then. But Paytm and Vijay have normalised hyper success.

So today, let’s trace the journey this visionary took.

Where it started

Back in 2007 when we had first invested and One97 was still a mobile VAS provider, Vijay had already predicted the smartphone explosion. He knew they would soon be commoditized and everyone would have one. Just for some context, in 2007, the iPhone then cost almost $500. In India, it cost Rs 31,000. In the US, queues of excited customers snaked around a few blocks. But in India, only four people in New Delhi had bought the iPhone from a single store on the day it launched its first 3G handset. India didn’t even have 3G back then.

But Vijay saw something. He knew things would change soon and change radically. He wanted to pivot away from value-added services to payments. He saw that once people had smartphones, they would pay on their devices, instead of cash or even cards. Vijay imagined a country where digital payments would be used by 500 million people when, in India, the smartphone revolution hadn’t even properly begun.

Where the world saw missed calls and text messages, Vijay saw payments done over high-speed data. He believed all he needed was to get people hooked on to paying for services on their phones. Once they saw how easy it was, they would never go back. Beyond the payments, a new version of the internet would open up to them. Vijay was living at least a decade in the future. His vision was so ahead of its time, he was talking about small vendor payments already.

It’s fair to say that the Elevation team was unsure...but not for long. Vijay’s idea was audacious and risky. But on seeing his confidence, a decision was made to give him a small pool of capital (~USD 1 million), to test his ideas for 6 months -  a financial sandbox, if you will. He changed the name of the company from One97 to Paytm.

Side note. Paytm translates to Pay Through Mobile.

Here’s how Vijay started. He opened up users to recharge their prepaid mobile and direct-to-home (DTH) services. This allowed people to transfer money quickly, easily, and at zero charges.

That was 2010.

When the world woke up to Paytm

Elevation has backed Vijay through the years after that. The idea of investing in private companies is to understand the firm and back it through the years so it can realise its potential. Paytm was quickly becoming ubiquitous. It needed a push to get on the proverbial rocketship. That was when Ravi helped introduce Vijay to Jack Ma.

Vijay and Jack were only supposed to meet for a 20-minute meeting. The meeting lasted for two hours. Soon, with more capital and Ant Financial by his side, Paytm crossed the 100 million user mark. Next, Paytm introduced QR codes to make payments even easier, completely redefining the way people pay.

The popularity of Paytm was attracting attention. And that’s when Vijay met Masayoshi Son. SoftBank wrote what was then considered the biggest cheque ever: $1 billion. Soon after, Berkshire Hathaway made its first-ever private company bet. Today, Vijay has three of the biggest names in business associated with him: Ant Financial, SoftBank, and Berkshire Hathaway.

In the past years, Paytm has done a lot more than payments. It has launched personal finance, insurance, games, and even ticketing. You name it, they did it. Paytm is creating India’s first super app.

What makes Vijay a true visionary is his confidence and enthusiasm to bring about a change in India. It is his belief that Paytm wins only when India does.

Today, when Paytm lists, it will only be a milestone in this company’s life. We are proud to continue this journey with them. The lifespan of a true behemoth is never measured in years. It is measured in decades. And Paytm is just getting started.

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