Zeta becomes a unicorn with $250 million SoftBank-led funding

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Zeta, a startup that helps banks and fintech firms launch products, is the newest to attain the coveted unicorn status after closing a financing round.

The banking tech firm, co-founded by veteran Indian entrepreneur Bhavin Turakhia, said on Monday it has raised $250 million in a Series D Series C round led by SoftBank Vision Fund 2, confirming a TechCrunch report from mid-April. Existing investor Sodexo also participated in the round.

The new round valued the startup, which has offices in Bangalore and Dubai, at $1.45 billion. That’s up from the $300 million valuation that Zeta reported in the second half of 2019. (Turakhia said the startup incorrectly called the previous round Series C.)

Zeta has developed a technology stack that helps it engage with both banks, fintech startups, as well as other online consumer platforms. The thesis is that banks — largely operating on antiquated technologies — today don’t have the time and expertise to offer the best experience to hundreds of millions of customers and fintech firms they serve.

“Banks are still stuck in the ’80s. Many of them still use COBOL programming language. They offer poor user experience,” said Turakhia in a press briefing Monday, adding that to make up for it, banks end up working with dozens of vendor and technology partners. “Nobody thought of building the bank stack from the ground up. Until now.”

Banks, which have licenses to offer financial services to customers, use Zeta’s cloud-native API and SDKs to launch credit cards, debit cards, loans and offer improved experience to customers, and also work with fintechs.

“Any financial service you can think of, Zeta provides it today,” he said.

The startup today serves 10 banks and 25 fintech firms, and plans to deploy the fresh capital to reach more clients and increase its headcount.

The journey of Zeta. (Image: Zeta)

Zeta is SoftBank Vision Fund 2’s latest investment in India. The Japanese conglomerate, which minted another unicorn in social commerce Meesho last month, is in advanced stages of talks to invest up to $500 million in food delivery giant Swiggy and is also engaging with SaaS startup WhatFix.

“Banking software is a $300 billion industry globally. Most banks still employ technology which is significantly older than their customers, impacting user experience and engagement,” Munish Varma, a managing partner at SoftBank Investment Advisers, said in a statement.

Zeta is the 14th Indian startup to become a unicorn this year as Tiger Global, Falcon Edge, and SoftBank accelerate their pace of funding in India, the world’s second largest internet market.

Turakhia, with his brother Divyank, started his first venture in 1998. Along the way, they sold four web companies to Endurance for $160 million. Zeta is the third startup Bhavin has co-founded since then — the other being business messaging platform Flock and Radix.

“The increasingly digital world represents evolving security, privacy and data protection challenges to banks. The industry needs systems reinvented with security, privacy, scalability and reliability as the core foundations. Zeta’s Omni Stack answers that need,” said Ramki Gaddipati, co-founder and chief technology officer of Zeta, in a statement.

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