Serial entrepreneur Bhavin Turakhia founded banking technology firm Zeta has become a unicorn following a $250 million investment led by SoftBank Group Corp’s Vision Fund 2. The Series C capital infusion valued the nearly seven-year-old startup at $1.45 billion.
The valuation makes Zeta the 14th entrant to the global league of unicorns from India this year. Unicorn is industry parlance for startups valued privately at $1 billion or more.
With the investment, SoftBank Vision Fund 2 will own around 17.3% stake of Zeta. It will also have a board seat, Turakhia said during an online press briefing on Monday. External investors, he added, now own close to 30% of the company while the promoters hold 70% stake.
Avendus Advisors was the sole financial advisor to Zeta on the transaction.
The $1.45 billion valuation in this round is a significant mark up from the $300 million valuation that Zeta fetched in 2019. At the time, French food services and facilities management firm Sodexo had invested an undisclosed sum in the company. Sodexo participated in the current SoftBank-led round with a $10 million commitment.
For Turakhia, who founded Zeta in 2015 with Ramki Gaddipati, the investments from SoftBank and Sodexo earlier mark a departure from his preference for bootstrapping his businesses. Zeta was initially internally funded by Directi, founded by brothers Bhavin and Divyank Turakhia. It started out as a meal voucher product for employees and later pivoted to a neobanking and banking technology provider.
Zeta will use the capital raised in this round to grow its business in the United States, Europe and India, apart from scaling its operations team and platform, the company said in a statement. Turakhia said that the company will also evaluate inorganic growth opportunities in new geographies for expansion as well as technology acquisition and acquihires.
During the press briefing, Turakhia said that based on current contracts, the company will clock an annual revenue run-rate of $250-$300 million. “Our capital needs are in the near term and we would still have a considerable amount will last longer than 2023 when we target EBITDA profitability,” he added.
Zeta offers credit, debit and prepaid card processing, core banking and mobile app solutions to banks and fintechs. Its customers include Sodexo, HDFC Bank, Kotak Mahindra Bank, Yes Bank, and others.
“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. Zeta’s modern Omni Stack will drive banking software upgrades catering to the digital consumer, and innovations in financial services globally,” said Munish Varma, managing partner at SoftBank Investment Advisers in the statement.
The Mumbai born Turakhia brothers sold Directi’s web presence business for a reported $160 million in 2013 to Nasdaq-listed Endurance Group. Later, in 2016, Divyank Turakhia sold his ad-tech company Media.net to a consortium of Chinese firms for $900 million.