Companies
Zeta’s valuation zooms to $2 billion after $50 million funding
Summary
The US-based banking software startup achieved unicorn status back in 2021, when it raised $250 million at a valuation of $1.15 billion in a funding round that included Japanese investment firm SoftBank.
Banking software provider Zeta has raised $50 million in its latest funding round at a valuation of $2 billion. The US-based startup achieved unicorn status back in 2021, when it raised $250 million at a valuation of $1.15 billion in a funding round that included Japanese investment firm SoftBank.
The latest investment was made by US-based healthcare services firm Optum, a subsidiary of the UnitedHealth Group.
Zeta’s full-stack system supports everything from core banking products to digital banking applications.
“For the most part, we believe the cash is just going to sit in the bank as a buffer, it’s always nice to have a cash buffer in this market and industry," Zeta’s global chief executive officer (CEO) and founder Bhavin Turakhia told Mint in an interview. The company says the $50 million is most likely going to go into its cash reserves, which can be used to deal with unexpected expenses.
So far, the company has invested approximately $400 million in technology since its founding in 2015. Zeta says it’s on the path to profitability and will be in the green by March 2026. “Our burn rate has consistently come down to a point where we’re exceeding our targets," Turakhia said.
The banking technology space is a challenging place to be in, at a time when central banks worldwide are tightening regulations to protect consumers, and competition in the fintech sector is heating up. But Turakhia believes there is opportunity in the sector like never before. “There is truly an opportunity to leverage new regulations and new opportunities in a meaningful way," he said.
Zeta is currently in conversation with up to 22 of India’s top banks to sell its products. It’s looking to close and convert some of them into long-term contracts within the next 12-18 months.
Also read | Fintech unicorn Zeta launches UPI-linked credit-as-a-service for banks
A report released by PwC India says a key focus area for banks in India is digital transformation. “I don’t think any bank’s CIO (chief information officer) will tell you that they want to continue with existing legacy systems for the next ten years," Turakhia said. However, he pointed out that financial institutions want to minimize impact on their existing portfolio and that technology adoption is an “extremely high investment exercise."
In 2025, Zeta plans to split its focus, with 70% dedicated to delivering on existing contracts. “The remaining 30% will be on new prospects that we’re talking to in Indian and global markets and trying to close three to five of them in the next year," Tukharia said.
On top of the existing 25 million accounts that Zeta supports on its cloud-native processing platform Tachyon, the startup is looking to onboard 25 million additional accounts. The fintech company counts major banks and financial providers as its clients, including India’s largest private lender HDFC Bank, global corporate benefits provider Pluxee and Sparrow Financial, a card issuer for non-prime cardholders in the US.
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