Zeta becomes 14th Indian unicorn this year after SoftBank funding

Mumbai | Bengaluru: Banking tech startup Zeta has raised $260 million in a funding round led by SoftBank Vision Fund II at a valuation of $1.45 billion. In the process, it has become the latest Indian startup to join the coveted unicorn club.

SoftBank has invested $250 million for 17% stake, while existing investor Sodexo has put in $10 million.

The round could close at $300 million, a source told ET, as Zeta is in talks to raise another $40 million from a few other investors. Avendus Capital is the adviser to the transaction. The Bengaluru-based startup’s valuation has surged nearly five times from $300 million during its previous round in 2019.


Zeta has become the fourteenth Indian startup to become a unicorn this year—joining Cred, Razorpay and Groww in the club—underscoring the growing demand among equity investors for growth-stage fintech companies in the country.

The company, founded in 2015 by serial entrepreneur Bhavin Turakhia and Ramki Gaddipati, specialises in helping banks build modern retail and fintech services for their customers.

“A predominant chunk of our funding will go towards accelerated global expansion. We are launching in the Middle East, and will increase our presence in Latin America, South Asia as well,” Turakhia, co-founder and chief executive, told ET over a video call. “Our goal is to become the de facto banking tech platform globally. Based on just our existing contracts, in the next 4-5 years our platform will have 70 million users, making it the largest neo banking platform in the world."

Zeta's near-term focus will be on fresh hires and completing product upgradations. It may look at a public listing eventually, Turakhia said, without specifying a timeline.

The startup's business model is to convince big banks to outsource tech infra capabilities to it, enabling the lenders to focus on backend compliance and services. Its clients include banks in Asia and South America. The startup also has a cloud-native API-first banking stack for easy integrations. The company has now launched an omnichannel API stack for financial institutions, which will enable it to build specialised backend rails for neobanking, consumer loans and fraud analytics.

“With the growth of digital banking, innovation in financial services and the rising bar of quality consumer experience, banking software across the world needs an upgrade to cater to the digital customer,” said Sumer Juneja, partner and head of India at ‎SoftBank Investment Advisers. “Zeta, with its full-stack tech solution and experienced management team, is well placed to facilitate this journey for banks and financial institutions."

The company will also join a growing list of SoftBank-backed unicorns in India, such as Paytm, PolicyBazaar and Ola. It has joined these three very companies in presenting a joint bid to the Reserve Bank of India (RBI) to set up a New Umbrella Entity (NUE) for retail payments, ET reported earlier.

Indian startups, especially growth-stage fintech firms, have been in demand among risk investors since late 2020. According to Pitchbook data, in the first four months of 2021, domestic startups have collectively raised over $8 billion.

Much of this funding frenzy can be attributed to rapid digitisation—led by India’s fintech and payments sector—in the consumer economy, which has been accelerated by the Covid-19 pandemic. Transaction volumes on the Unified Payments Interface (UPI) more than doubled in March 2021 to 2.7 billion from 1.25 billion in the same perioda last year.