In 2021, the UK neobank zopa which has been around since 2004, jumped to a billion-dollar valuation thanks to a big investment from SoftBank and a plan to go public in 2022. Now it's 2023, it gets another fundraising of a different kind as the wait for the IPO markets to reopen.
The startup has raised £75 million, a debt fundraising it plans to use to shore up its finances, look at some acquisitions and continue building more products alongside its loans, savings and deposits, BNPL and other services used by its million customers.
The funding is led by IAG Silverstripe with participation from other investors, and comes around seven months after the startup raised a tranche of capital, also totaling £75 million, led by the same backer. Ha raised £530 million to date.
Many startups seeking new capital investors may still be feeling the chill of the funding winter, but things continue to heat up in the world of debt. A report from before this year noted that in May, debt had just tipped (50,5%) to become the largest source of financing for startups and was generally on a stronger growth curve than equity-based financing.
Some might opt for debt as a faster way to obtain financing or as a way to raise money without giving up capital.
Zopa relies on one of the other common reasons: it's already generating cash and growing, so it has a strong case to pay whatever it decides to draw from the debt line. It is already EBITDA positive and says it is on track to be profitable for the full year for the first time this year.
Specifically, the company says it is currently on track to earn £250 million this year at an annual run rate.
There are no future plans to launch services outside the UK.
“There are so many opportunities in the UK today that we don't need to go international anytime soon,” CEO Jaidev Janardana said in an interview. The company launched two new products this year - a BNPL service and a long-term savings account popular in the UK called ISA - and Janardana said the plan is to launch two more next year as it continues to wait for the IPO waters. they "warm up."
