2. Company
Overview
Market Size Valuation Term Sheet
Offerings
1. Mobile/ DTH/ Utility Bill payments
2. Wallets and Payment Gateway
3. Marketplace
Competition
• Mobikwik – No 1 online Recharge Site
• Fast Recharge – First online mobile recharge
company
• Freecharge – 2nd biggest recharging and
couponing site
• Paypal – Largest global payment gateway
History
• Founded by Vijay Shekhar Sharma
• Consumer brand of One97 Communications
• One97 investors include SAIF partners, Intel
Capital and SAP ventures.
What’s Next
• Target of 1 mn merchants
• Target mobile users – 100 mn
• Target wallet base – 100 mn
• Grocery business with 10000
transactions in the first few months
• 50000 retail outlets
• Payment Bank License
3. How large is the mobile payment market and how fast is it growing?
Company
Overview
Market Size Valuation Term Sheet
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
%ofsmartphoneusers
Mobile Payment Trends in India
0%
5%
10%
15%
20%
25%
30%
35%
%ofpopulation
Smartphone Penetration in India
0
100
200
300
400
500
600
700
800
in$billion
Global Mobile Payments
Transaction Value
Year 2014A 2015A 2016P 2017P 2018P 2019P 2020P
Mobile Payment Users (in millions) 71 98 1303 170 218 274 341
Source: Google’s Our Mobile Planet, Gartner, Goldman Sachs, eMarketer
5. Company
Overview
Market Size Valuation Term Sheet
What are the expected revenue streams from the mobile payment business?
Paytm Users
Date No. of Wallets Daily Transactions Ratio Average Transaction Value
Nov-14 15000000 800000 18.75 Rs. 250-300
Feb-15 25000000 1000000 25 Paytm Avg. Revenue/Transaction
Apr-15 50000000 2000000 25 3.0%
Dec-15 100000000 4000000 25 (Convenience, Commission, Charges)
Scenario 2: Average Transaction Value Increases (@ 5% = rate of inflation)
Year 2014A 2015A 2016P 2017P 2018P 2019P 2020P
Number of Smartphone Users 253404800 320557072 369820283 420219650 454366174 459818568 465336391
Mobile Payment Users 70953344 97745890 130430883 170025827 217548224 274015580 340445398
Paytm Market Share 21% 51% 77% 77% 77% 77% 77%
Number of Daily Transactions 800000 2000000 4000000 5214281 6671678 8403396 10440638
Average Daily Transaction
Value 200000000 500000000 1050000000 1437186266 1930825410 2553594997 3331298343
Average Daily Revenue 6000000 15000000 31500000 43115588 57924762 76607850 99938950
Annual Revenue (in $ million) 37 91 192 262 352 466 608
6. Company
Overview
Market Size Valuation Term Sheet
What are the expected revenue streams from the m-tailing business?
Scenario 1 2014 2015 2016 2017 2018 2019 2020
Increase in market share in M-tail 5% 8% 10% 0% 0% 0%
Market share in M-tail 6.00% 6.30% 6.80% 7.48% 7.48% 7.48% 7.48%
Sales (billion USD) 0.04 0.07 0.13 0.24 0.40 0.66 1.10
Revenue (at 7% of sales) in million USD 2.99 5.20 9.29 16.92 28.00 46.33 76.68
Scenario 2 2014 2015 2016 2017 2018 2019 2020
Increase in market share in M-tail 5% 8% 10% 10% 10% 10%
Market share in M-tail 6.00% 6.30% 6.80% 7.48% 8.23% 9.06% 9.96%
Sales (billion USD) 0.04 0.07 0.13 0.24 0.44 0.80 1.46
Revenue (at 7% of sales) in million USD 2.99 5.20 9.29 16.92 30.79 56.06 102.06
Scenario 3 2014 2015 2016 2017 2018 2019 2020
Increase in market share in M-tail 5% 8% 10% 0% 0% 0%
Market share in M-tail 8.00% 8.40% 9.07% 9.98% 9.98% 9.98% 9.98%
Sales (billion USD) 0.06 0.10 0.18 0.32 0.53 0.88 1.46
Revenue (at 7% of sales) in million USD 3.99 6.93 12.39 22.55 37.33 61.77 102.23
Scenario 4 2014 2015 2016 2017 2018 2019 2020
Increase in market share in M-tail 5% 8% 10% 10% 10% 10%
Market share in M-tail 8.00% 8.40% 9.07% 9.98% 10.98% 12.07% 13.28%
Sales (billion USD) 0.06 0.10 0.18 0.32 0.59 1.07 1.94
Revenue (at 7% of sales) in million USD 3.99 6.93 12.39 22.55 41.06 74.75 136.07
Scen
ario
Market
share in
2014
Growth in market
share
1 6%
Market share
constant after
2017
2 6%
Market share
steadily
increasing
3 8%
Market share
constant after
2017
4 8%
Market share
steadily
increasing
7. Company
Overview
Market Size Valuation Term Sheet
How have comparables been valued?
Business of Paytm is divided into two parts and each part is valued individually using the comparable ratios of related
companies
M-Tailing
Mobile
Payment
Revenue Drivers
Customer base
Mode of Payment
Number of daily transections
Average transaction value
Product Portfolio
Revenue Drivers
Customer base
Merchant base
Number of daily transections
Average transaction value
Comparable Company
Snapdeal
• 75% of its transactions come from
mobile, maximum when compared
with other e-commerce giants
• Recently acquired Freecharge, aims
to target smart phone users.
• Similar product portfolio
Snapdeal (Only Market Place)
Revenues/year 168.1 Crore Rs
Customer base 20 million
Valuation 62000 million Rs
Figures are of 2014
Valuation/revenue 36.41
PayPAL
• The most established player for
mobile wallet in the market
• eBay acquired PayPAL in July,2012 for
$1.4 billion, which allows us to factor
in the effect of m-commerce on
wallet business
• Can be seen as proxy of Paytm’s
future in terms of scale
PayPAL just after the acquisition in 2012
Payments per day 440000
Daily amount (million $) 24
deal valuation (billion $) 1.4
Revenue/year @ 2.5% margin 219
Avg payment amount sent in a day ($) 55
value/daily transaction value 58.33
Valuation/revenue 6.39
1
2
8. Company
Overview
Market Size Valuation Term Sheet
What is Paytm valuation using the venture capital method?
M-Tail Business 2020( figures in million $)
Projected Revenue 103.84
Price to sales multiple 36.41
Value 3780.47
Wallet Business 2020( figures in million $)
Projected Revenue 608
Price to sales multiple 6.39
Value 3885.12
7665.59
million $
Discount factor 35%
Present value of
PAYTM
1.7 Billion $
Post money value
1.70 Billion $
Pre money value( Post
money- Investment)
1.35 Billion $
9. How much investment is needed?
Strategic Growth Goal Objective Plan
Capital Requirement
(in $ million)
Greater geographic
penetration and speed
Expand deliveries from 5000-7000
pin codes to 36000
Platform for aggregating courier
companies
Shipdroid seed money Rs.
60 crore 10
Larger catalogue for users
to choose from
Increase number of products and
product categories
Increase number of merchants
from 15000 to 1 m
Offline Classroom Digital
Literacy Rs. 2000/p 33
Increase customer base
and market share
Reach 100 million mobile wallets
target Aggressive advertising spends
Rs. 60 per customer
acquisition 50
One-stop destination for all
banking services
Offer all the services of payment
banks Payment bank license from RBI
Entry capital Rs. 50 crore
for operations 8
Partner with banks to offer services
to end users
Open 50000 offline retail
outlets; IMPS
Rs. 15000 monthly rental
for outlet 150
Catering to growing
demand in services
Expanding manpower across all
verticals Hiring 4500 new employees Avg. salary is Rs. 8,82,223 66
New office space to accomodate
employees Three new office spaces in Noida
Rs. 30-35/sq ft for
350,000 sq ft spread 24
Total 341
Company
Overview
Market Size Valuation Term Sheet
10. Company
Overview
Market Size Valuation Term Sheet
Stake Holding Pattern
Proposed Terms for Preferred Stock Financing of Paytm (One97communication)
1. Board Rights: The holders of preferred stock shall be entitled to elect one member to the Company’s Board
2. Piggyback Rights:
• The holders of Preferred Stock shall be entitled to “piggyback” registration rights on registrations by the Company on any demand
registration of any other investor subject to the right, however of the Company and its underwriters to reduce the number of shares
proposed to be registered pro rata in view of market conditions.
• Unless the registration is with respect to the Company’s IPO, in no event shall the shares to be sold by the Investors be reduced below 20%
of the total amount of securities included in the registration
3. Preemptive Rights and Control Covenants: The investor has the right to maintain only upto its ownership interest in the Company in the
event the Company issues additional stock and will contain customary negative control covenants including provisions restricting the Company
from doing any of the following without the prior written consent of at least two thirds of the Preferred then outstanding.
• Any alteration or adverse changes in the rights, preferences or privileges of the Preferred, and any increase in number of shares
• Any merger or sale of substantial portion of assets, any material change in nature of business conducted.
Preferred Stock - 15% Dividend
Shipdroid was launched by Infibeam as a courier aggregator startup, which can either be acquired by Paytm or copied)
Training programs, workshops and marketing support provided to sellers
Paytm's customer acquisition cost is one tenth of traditional e-taillers whose cost is Rs. 600/customer
All money will be invested in safe govt. securities
Based on average monthly rental costs for ATMs in top 10 Indian cities
Average salary is determined by salary listings on Glassdoor's Paytm page
Current property rates as recent as March 2015
