By Oliver Smith on Monday 18 October 2021
Zopa joins Revolut, Klarna and eToro in Softbank’s Vision Fund 2.
Neobank Zopa today confirmed a phenomenal $300m “pre-IPO” funding round led by Japanese telecoms giant Softbank’s Vision Fund 2—a multi-billion dollar venture fund.
The mammoth funding announcement was revealed alongside news that Zopa is set to reach monthly profitability in the next 10 weeks, just 18 months after securing its banking licence.
CEO Jaidev Janardana told AltFi that the fresh funding will go entirely into boosting Zopa’s regulatory capital in order to grow its balance sheet lending.
“We launched the bank about 18 months ago, and have had great growth with a balance sheet north of £800m now and we hope to take it to about £2bn by the end of 2022. That means we just need more capital,” he said.
In the last months, Softbank’s Vision Fund 2 has led multi-million dollar investments into Revolut, eToro and Klarna, cementing its position as one of Europe’s most prolific fintech investors.
Along with Vision Fund 2, new investor Chimera Capital along with existing investors IAG Silverstripe, Davidson Kempner Capital Management LP, NorthZone, and Augmentum Fintech are all participating in the round adding that extra capital to Zopa’s warchest.
On profitability, Janardana says that the funding round would not be spent on the kind of marketing or product innovation that could push the business back into the red.
“Over the next 18 months, the bank will be generating significant profits,” he said.
Today Zopa lends via its credit cards, personal loans and car financing, while offering savings accounts and continues to offer some peer-to-peer investment opportunities for existing customers.
While Softbank’s Vision Fund has developed a reputation for encouraging businesses like Uber and WeWork to chase growth at any cost, Janardana is clear that he doesn’t expect huge changes at Zopa.
“They are they bought into the plan that we have,” he said. “In fact, that’s part of what attracted them to us, the fact that we have been prudent in the way we make lending decisions.”
Still, as a regulated bank now, Softbank’s deep pockets could come in very handy.
“Having an investor who can actually write these big checks can be supportive, not just from an investor standpoint, but also in the broader ecosystem it will definitely make Zopa a more powerful player,” Janardana hinted.
Zopa’s funding announcement was made at the UK’s Global Investment Summit in London, hosted by Boris Johnson, however, the deal is currently pending regulatory approval from the PRA and the FCA.
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