Google-Backed Neobank Open Becomes Unicorn with New Funding

Google-Backed Neobank Open Becomes Unicorn with New Funding

India now boasts a total of 100 unicorns. The Bengaluru-based neobank Open joined the exclusive club on Monday with a fresh investment round, according to the company. The five-year-old company didn’t say how much money it raised in its Series D round, but a source familiar with the situation claimed it was around $50 million. According to the two, Mumbai-based investment firm IIFL led the fresh round, which valued Open at $1 billion. The financing included existing investors Tiger Global, Temasek, and 3one4 Capital, and comes just seven months after Open announced its Series C fundraising at a $500 million value. Too far, Open has raised over $187 million.

Open operates a neobank that provides small and medium-sized organizations and enterprises with virtually all of the features of a traditional bank, as well as extra tools to better serve their requirements. In India, millions of small and medium-sized enterprises struggle to keep track of several bank accounts, keep track of daily expenditures, and distribute payments to employees. More than 2.3 million companies in India utilize the startup, which has connections with over a dozen prominent banks, according to the company. Each year, Open handles approximately $30 billion in transactions, according to the company.

In recent years, the business has expanded its products to include white-label licensing of its neobanking technology stack to banks, which then sell it to their own consumers. To further widen its offers, the business said it plans to introduce three more products in the coming months: revenue-based financing Flo, early settlement card providing Settl, and working capital loan Capital. It plans to issue $1 billion in loans through its new products over the next 12 months, according to the company.

“For our series D financing, we’re thrilled to be partnering with IIFL as well as previous investors Tiger Global, Temasek, and 3one4 Capital.” In a statement, Anish Achuthan, co-founder and CEO of Open, said, “We see a lot of synergies with IIFL, especially on leveraging the lending book, as we are getting ready to launch innovative products like revenue-based financing, early settlement, working capital loan, and business credit cards to SMEs on our platform.”

The rise of Open in recent years, which has prompted numerous other firms to enter and develop in this space, has altered the relationship between banks and fintechs substantially. Most Indian banks were wary about neobanks just a few years ago, and fintech innovators told TechCrunch it was tough to persuade any of them to cooperate. “Neobanks are gaining traction as platforms for millennials and small businesses to digitalize banking or bank-like services.” “The top four global neobanks are worth $100 billion, and Indian fintechs have gotten a head start with companies like Open, RazorpayX, Fi, and Jupiter,” said Jefferies analysts in a research last year.

“In reality, several Indian fintechs are planning to grow from 1-2 platforms to neobank in the next 3-5 years.” They are collaborating with existing banks and NBFCs. “Monetisation is a long way off,” they added. The news today is a watershed moment for the Indian ecosystem, which is home to one-tenth of the world’s unicorns. When adtech startup InMobi in 2012 became India’s first unicorn, a company valued at $1 billion or more, it was more than a decade ago, when entrepreneurs were few and investment was scarce. Things have changed considerably in the last decade, with an ever-increasing number of entrepreneurs deciding to start their own business. Since last year, more than 60 Indian firms have joined the unicorn club.

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