The new funding “markedly enhances” Zopa's unicorn status.
Bucking the trend of down rounds and valuation cuts, Zopa has just secured a massive £75m in funding.
The digital bank with a vision to become “Britain’s best bank” said the deal cements and “markedly enhances” its unicorn status, although it did not disclose its new valuation.
It hit a valuation of $1bn in October 2021 when it raised $300m in a round led by SoftBank’s Vision Fund 2, and since then has gone on to reach profitability – just 21 months after winning its banking licence and pivoting out of peer to peer lending.
Zopa plans to use the fresh funding, led by existing investors, to accelerate growth this year, with mergers and acquisitions dealmaking kicking off as soon as this quarter, it said.
“Today’s equity round reaffirms the support of our investors despite the challenging economic environment,” Zopa CEO Jaidev Janardana said
“It is a clear validation of Zopa’s responsible, sustainable and profitable approach to lending, our strong unit economics, and our vision to build Britain’s best bank.”
Zopa massively expanded its suite of financial products last year and intends to continue doing so following several profitable months in 2022 and the “very likely” possibility of converting into full-year profitability for 2023.
The bank continues to grow revenue by more than 100 per cent year on year and has to date attracted £3bn in deposits, has more than £2bn of loans on its balance sheet and has issued more than 400,000 credit cards.
“Zopa takes an agile and dynamic approach to credit risk which means it has continued to lend responsibly in a changing environment,” Janardana said.
“As a result, our business remains resilient with record loan origination volumes, stable credit performance comparable to pre-pandemic levels, and continued innovation.”
Back in October, the bank was rumoured to be in talks to raise $100m (£81m) ahead of talks of a potential initial public offering (IPO).
Zopa had at one time been set on a 2022 IPO, but a year after stating that, the bank decided to delay it, stating that market conditions were not right.
Having now raised just shy of that predicted amount, we’ll be watching to see if an IPO is on the horizon.
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