After raising $300 million in a SoftBank-led round in 2021, the UK neobank zopa has closed a deal to put more funds in its coffers. The company, which provides consumers with loan services, credit cards and savings accounts and has some 850,000 customers, has raised £75 million (about $93 million), an equity investment that it plans to use both to develop new financial products. , to attract more customers and make acquisitions.
Interestingly, Zopa is not disclosing a lead investor, but CEO Jaidev Janardana confirmed to us in an interview that it was an internal round of existing investors; that some of those involved included investment firms Uprising and Augmentum; and that SoftBank was No. in this round but remains an investor and board member. The company also said in a statement that the funding "consolidates and markedly enhances" its unicorn status: the $300 million round in 2021 was done at a $XNUMX billion valuation, but it does not provide an actual valuation with this latest round. .
There are some signs that this round took a while to close. There were rumors of the fundraiser in september last year and at the time it was said that Zopa was looking to raise around $100 million.
Those reports also noted that this could be the last fundraiser for the company before going public, though Janardana declined to comment on timing, given the current state of the public markets and the fact that Zopa, in his words You have no pressure to do so at this point.
This latest injection of funds comes at a key moment in the economy of the United Kingdom.
The IMF released a report earlier this week in which predicted that the UK would be the only major economy to shrink in 2023. But despite that dubious distinction, and amid a lingering threat of recession, challenger banks appear to continue to find traction with consumers and businesses seeking better rates. and faster services than those being offered by more traditional banks.
The company says it surpassed £3.000bn in deposits in its savings business this month, with £2.000bn in its lending business (with £8.000bn in loans approved in total) and some 400.000 credit cards in circulation. . At the moment It has some 850.000 customers in the different sections of its business. Revenue figures are not disclosed, but the company says they have doubled in the past year. It is also on track to be profitable for the full year in 2023, the first time since it was first founded 17 years ago.
Regardless, the growth of the lending and financial services market has definitely slowed, Janardana said, with 2022 decidedly back to "pre-pandemic levels" of activity.
"Demand for credit has fallen...and overall when I look at the demand for loans in the industry, there's only been 5% to 10% growth in the last year," he said, citing a big drop in credit. discretionary spending as one of the key factors. reasons for that. "But this hasn't impacted us as much as it has others." LendingClub, another large lending company in the country, plans to cut about 14% of staff in January.
"The love Lóleo they are going digital and looking for more options instead of going to a bank,” he continued. "That more informed consumer behavior means our volumes continue to grow."
Acquisitions and new products will aim to capitalize on that, he said, while helping the company diversify its business at the same time. Areas that Zopa would like to explore include product creation aimed at businesses, and also wants to further expand into payments along with its credit, loan and savings products.
The current market is experiencing a lot of pressure on the valuations and the sea of tech startups Financial firms that have been funded over the years also find it more difficult to raise more money, giving Zopa (and others) an opportunity to grab those assets. However, Janardana pointed out that the 75 £millions should not be seen as the ceiling for such valuations, since he is likely to close deals that will be combinations of cash and stock, and that he still has a lot of money in the bank from previous rounds. He added that investors are also willing to put up more for the most interesting deals and that so far Zopa has yet to explore raising debt.
