Ashneer Grover: The Man Who Means Business In a recent chat with Entrepreneur India, Grover discussed his journey so far, his team, future plans, IPO and much more

Some call him rude, some call him honest, but Ashneer Grover, MD and co-founder, BharatPe, couldn't care less about what others think of him. In his own words, "I'm not here to please anyone. Dhandha karne aaya hun (I'm here to grow my business)."

Well, he clearly has done that and how!

Founded in 2018 by Grover and Shashvat Nakrani, the merchant payments startup boasts of launching India's first interoperable UPI QR code, to offer a single interface for all existing UPI apps, supporting Paytm, PhonePe, Google Pay, BHIM, Mobikwik, Freecharge, TrueCaller and other apps through its service. Also, the startup is backed by marquee investors such as Tiger Global, Dragoneer Investment Group and Steadfast Capital, among others.

Furthermore, within three years of its launch, BharatPe entered the coveted Unicorn club in August 2021 after raising $370 million at a $2.85 billion valuation. The company became the fifth fintech startup in 2021 to achieve the Unicorn status and in the next four years, Grover envisions the company to at least grow 10 times on an overall company basis.

Merchants First

According to Grover, at the core, BharatPe will always be merchants first. "If it is not adding value to merchants, I will not do it," Grover tells us candidly. Going ahead also, 80 per cent of BharatPe's business will be the core, that is merchant lending, but much bigger and deeper merchant lending, which means auto loans and home loans. "I understand the merchant, I understand his needs and have the ability to collect, so I won't restrict myself to business loans," he said.

BharatPe serves more than 7 million merchants across 140-plus cities. It had crossed $13 billion in annualized payment number in October 2021 and plans to ramp it up to $30 billion by March 2023. Also, it has set a target of building a loan book of $5 billion in the next five years to address the unmet credit gap among millions of SMEs in India. In total, it has facilitated disbursals in excess of $400 million in unsecured loans to over 300,000 merchants.

In October 2021, the fintech Unicorn raised INR 100 crore in debt funding from MAS Financial Services Pvt Ltd, to strengthen its merchant lending vertical that had disbursed $400 million in unsecured loans to over 300,000 merchants till then.

Though merchants will be the core focus, 20 per cent of its business going forward will also be consumer, which will be consumer credit or BNPL (buy now pay later).

The BNPL Theory

Grover and his co-founder forayed into the BNPL segment in October 2021 with the launch of "PostPe'. After downloading the app from Play Store, customers can avail interest-free credit limit of up to INR 10 lakh. In October, BharatPe said that it aims to facilitate a loan book of $300 million on postpe in the first 12 months, for its lending partners. "We will have a merchant tab, which will be BharatPe and then a consumer tab which will be postpe," he said.

"It is the only product in which you can actually use credit to pay on a QR. The way I think about it is pretty simple. Why are you able to buy an iPhone on credit, but not a golgappa? In fact, a golgappa as a transaction is much less riskier than someone buying an iPhone, which is going beyond his regular means and income," he said.

Grover's fundamental belief is that if India aims to become a $5 trillion economy, the path to that is easier access to credit, both at the business level and at a consumer level. "So, we have to stop demonising credit," he said.

Grover believes that traditionally we have been a savings economy, but there are two extremes of it. "We have an economy like Japan which is high on savings which has done well. On the other extreme, we have an economy like the US which is high on consumer behaviour and consumption. The way I think about it is you have to be responsible as a lender, on how much are you underwriting the person for," he said.

Banking Aspirations

In October 2021, the Reserve Bank of India issued a Small Finance Bank (SFB) license to the consortium of Centrum Financial Services Limited and Bharatpe's parent company, Resilient Innovations.

Grover aspires the new SFB, named as Unity Small Finance Bank, to be "India's first digital bank'. "Everyone calls themselves a bank, but no one has a banking licence, though they call themselves tech-enabled banks. To build something genuinely at a different scale, you need to have that license," Grover says proudly.

BharatPe has reportedly committed INR 1,500 crore to Unity. "What we do as a business at BharatPe continues as it is. To the extent we can help Unity become much bigger by also enabling them within our app, of course we will do that. But our lending business will continue to flourish within the BharatPe fold. The parts of the lending business which are de-risked enough for the bank to fund, will get funded by the bank," he said.

Grover was always clear that eventually they would have to become a bank and he firmly believes that in a few years Unity will be a very different digital banking experience than any other traditional bank in the market or anyone claiming to be a neobank as well.

Engineering BharatPe

An IIT-Delhi graduate himself, Grover believes in having a small tech team with above average intelligence. "For a company of our size and the level of volumes, transactions lending that we deal with, we probably have the smallest tech team. We do 55 lakh transactions a day. No amount of people can solve that problem. Because we had the right tech, I could scale up to the level we have," he said.

His belief in his team comes through when he speaks. "My fundamental view is to get extremely good quality engineers and give them the best of problems to solve. Give them good salaries and market leading equity ownership. What they will be able to build will be much better than having 500 techies who are average," he said. Not just that, Grover rolled out the first batch of BMW bikes for new joinees in the tech team in July 2022.

Startups and IPOs

Grover is highly opinionated and doesn't hesitate to speak his mind when it comes to startups' IPO play. "I like to listen to the market. I'm very keen to understand what the market is saying. My understanding is where you have monopoly, or duopoly, the market is willing to give a premium. If you look at Nykaa, they got a good premium as they are the only player in this space at that scale," he said.

BharatPe has launched a shareholding program for its merchant partners with a total pool of $1 billion by the time the company goes public, the timeline of which is not disclosed yet.

He firmly believes that the moment one comes up and says the company is very big, but there is no differentiation, that's where the market doesn't seem to be rewarding. "If you look at Paytm, it can say 'oh i do everything, I'm also a Phonepe, I'm also a BharatPe, I'm also a Policybazaar, I'm also a gaming company. When you say I'm everything,for everyone, that's where the market starts discounting you," he said.

Grover maintains that when you overvalue yourself, you are setting yourself up for failure. "Even today, for the amount of business we do, and the network we have built, we are undervalued against any comparable company. There are people, our peer groups, who are valuing themselves at 6 Bn, 7 Bn, 8 Bn, but we are saying no, we are very happy. We are in no rush to get to a bigger number, we are solving for the fundamentals," he said.

The fintech unicorn raised $370 million as a part a Series E fundraise in August 2021 led by New York-based Tiger Global. With this deal, the company was valued at 2.85 Bn.

Valuation is a trap, it is a notional number, it is not money in the bank, Grover says firmly. "Where a lot of founders flounder is they start thinking of valuation as a parameter of success. It is a quantification of their success, at some level, which is extremely wrong. I keep telling people to undervalue. Keep a buffer. Keep money on the table.

Grover also leaves us with some tips for retail investors. "If you believe that it is a good product, then put money into it, don't go by size, keep away from the secondary stocks, be smart, there is no brownie point for applying on the first day. All HNIs and institutional investors apply in the last two hours of the IPO. Wait to see what is happening," he said.

And, lastly, when asked about his time away from work, Grover says, "I don't party, I don't read, all I know is how to grow your business and make money."