From underdog to king of mobile payments: Paytm's Sharma has a lot to learn from Alibaba's Jack Ma

New Delhi: Vijay Shekhar Sharma says he began life as the underdog, someone who had to do day jobs of consulting and internet training for small companies to earn a living and generate capital for his business since 2001. The first investor who showed any faith in Sharma’s business - mobile payments through an e-commerce platform - was a businessman called Piyush Aggarwal. In 2004, Sharma was still doing day jobs and helped Aggarwal’s company set up the e-mail infrastructure. Aggarwal was convinced of Sharma’s business to give him Rs 8 lakh as capital and an office space. How wise this decision was is evident from the returns Aggarwal got: he exited Sharma’s company in 2010 after making Rs 86 crore. Now, another investor is planning to board Sharma’s One97 Communications and chances are, he may also see unimaginable returns. Alibaba, the largest and most valuable e-commerce company, has decided to pick up 25% stake in One97 for an undisclosed amount. This investment is being done through Alibaba’s financial arm Ant Financial Services, and marks Alibaba’s entry into India.

“No one wanted to invest in my venture, people did not believe we could build a company,” Sharma told Firstpost over phone from Hanzhou in China, right after posting a picture with Jack Ma on his Facebook page.It took Ma just over three months to sew up a deal with Sharma, which reports suggest could mean close to $400 million investment in One97 in phases.

[caption id=“attachment_2083235” align=“alignleft” width=“380”]  Source:Firstpost[/caption] This deal heralds the entry of Alibaba into the Indian market. But more than that, it could spell mega bucks and much needed focus on India’s small entrepreneurs and people who are currently excluded from banks’ purview.

Sharma said he met Ma first in October last year, when his company was looking for its first round of funding and he was in touch with a fund raiser in China. “My first meeting with Jack Ma happened around Diwali. I have immense respect and terrific chemistry with Ma. He said something which has stayed withe me ever since: Those who have gone through adversities and are building companies, they build great companies. This philosophy of his provided me with an instant connect”.

So how does the deal work? Sharma declined to provide specifics of how much investment is coming in, saying regulatory clearances are still pending and the final amount could vary. But he said that Ant Financial is picking up 25% stake in One97 and that this will be done by fresh issue of shares “so that all the money comes into the company”. After this investment, Sharma will hold a little over 27% stake in One97, SAIF Partners will hold 36% and remaining 12% will be with existing investors like Sapphire Ventures and Saama Capital.

Sharma said as of now, he has over 20 million paytm wallets but he is eyeing a five fold increase to 100 million in the next one year. “My ambition is to bring the half a billion Indians who are currently out of the banks’ radar into the mainstream economy and let them avail of capital, credit facilities through their mobiles. There are another 100 million small and medium enterprises who are similarly ignored by lenders. They should have access to funds, should be brought into mainstream commerce”.

Ant Financial Services Group is China’s leading online financial services company while One97 Communications (One97) which runs Paytm claims to be India’s largest mobile payment and commerce platform. In a statement yesterday, Paytm said it will use the funds of this acquisition to grow its mobile payment ecosystem and further boost the commerce user base. The deal is Ant Financial’s first-ever investment into an Indian company.

Ant Financial also runs Alipay Wallet and is the largest mobile payment service provider in China with over 190 million users. The statement said Ant Financial and Paytm will also build on synergies in the mobile wallet front in order to offer Indian consumers comprehensive products and services.