Bengaluru-based digital payments startup ToneTag has raised $78 million in a new funding round, led by stock market veteran Ravi Dharamshi’s private equity fund, ValueQuest Scale Fund, along with venture fund Iron Pillar. Existing investor Elevate Capital also participated in the round.

Iron Pillar has previously invested in startups such as BlueStone, CureFoods, and others.

Kumar Abhishek, founder of ToneTag, told ET that the round comprises both primary and secondary capital, but chose not to disclose which shareholders sold their stakes in this round.

In secondary capital, the funds do not go to the company; instead, they are channelled to the selling investors. ET had first written about this impending round in October 2024.

Unlike other payment firms, ToneTag is a product startup which has built a sound-based payment system to power both online and offline merchant transactions. It also offers an inventory management system for merchants and works with the National Payments Corporation of India (NPCI) to power UPI123 Pay, a feature phone-based payment system.

With over 30 million interactions per day, ToneTag uses its patented soundwave protocol to deliver payment solutions to global tech giants like Google and Amazon and leading Indian banks like State Bank of India (SBI) and ICICI Bank, amongst its customers.

Armed with the fresh funds, the company aims to scale up its operations and tap global markets as well. Currently, the startup has a team of around 90 people.

Looking at the growth of the Indian digital payments market, ToneTag believes that it can scale up its operations as more merchants accept sound-based payment systems. In India, the default payment system is QR codes and point-of-sales (PoS) terminals.

Investors who assessed ToneTag shared with ET their insights on how the company could drive transactions as an increasing number of devices become smart and internet-connected. Voice-enabled payments could facilitate transactions on platforms such as Amazon Echo.

Founded in 2014, the startup secured $14 million in funding from prominent investors, including Reliance Capital, Amazon, Mastercard, and others. The last major institutional funding round for the company was in 2018.