India has 100 unicorns now. Bengaluru-based neobank Open joined the coveted club on Monday with a new round of funding, he said.
The five-year-old startup did not disclose the size of its Series D funding, but a source familiar with the matter said it was $50 million. The new round, which valued the Open at $1 billion, was led by Mumbai-based investment firm IIFL, the two said. Existing sponsors Tiger Global, Temasek and 3one4 Capital also participated in the round, which comes just seven months after the Open announced its Series C funding at a valuation of $500 million. The Open has raised around $187 million to date.
Open operates a neobank that offers small and medium-sized businesses, as well as businesses, nearly all of the bank’s capabilities with additional tools to meet a business’s needs. Millions of small and medium businesses in India struggle to maintain multiple bank accounts, account for their daily expenses and distribute payments to employees.
The startup, which has partnerships with more than a dozen of India’s top banks, is used by more than 2.3 million companies, he said. Open processes more than $30 billion in transactions a year.
Open has expanded its offerings in recent quarters. The startup now supplies its neobanking technology to banks under a white-label licensing deal, which then sells it to its customers.
The growth of Open in recent years, which has made several other startups expand and innovate in this category, has drastically changed the relationship between banks and fintechs. Just a few years ago, most banks in India were skeptical of neobanks and it was very difficult to persuade any of them into a partnership, fintech founders told TechCrunch.
“Neobanks are gaining prominence as platforms to digitize banking or bank-like services for millennials and SMEs. The top 4 global neobanks are worth $100 billion and Indian fintechs started with Open, RazorpayX, Fi and Jupiter,” Jefferies analysts wrote in a report last year.
“In fact, many Indian fintechs plan to expand from 1-2 platforms now to neobank in 3-5 years. Incumbent banks/NBFCs are partnering with them. Monetization has been going on for some time,” they added.
Open said it intends to launch three new products – Flo revenue-based financing, early settlement card offering Settl and Capital working capital loan – in the coming months to expand its offerings to its customers. The startup is aiming to disburse $1 billion in loans through its new products over the next 12 months, he said.
“We are excited to partner with the IIFL and existing investors Tiger Global, Temasek and 3one4 Capital for our Series D round. We see many synergies with the IIFL, especially in leveraging the loan portfolio as we prepare to launch innovative products. such as revenue-based financing, early settlement, working capital lending and business credit cards for SMEs on our platform,” said Anish Achuthan, co-founder and chief executive officer of Open, in a statement.