Banking tech startup Zeta has become the tech world's latest 'unicorn' after raising $250m (£176.8) from Japan's Softbank in one of the largest investments in the space globally.
The 'Series C' cash injection values Zeta at $1.45bn, meaning it has reached so-called 'unicorn' status with a private valuation above a billion. The round was led by Softbank's (9984.T) Vision Fund 2 with participation from France's Sodexo (SW.PA).
Zeta has more than quadrupled its valuation over the last two years. In 2019, it received an investment from Sodexo that valued the company at $300m.
The spiralling valuation represents a coup for London-based founder Bhavin Turakhi. Turakhia — already a billionaire thanks to his serial entrepreneurship — started the company in 2015 alongside co-founder Ramki Gaddipati. The pair invested $40m of their own money to get the company off the ground.
Turakhia, 41, started coding aged 10 and had made his first million by the age of 20. Zeta is his fourth company, following success with the likes of Directi, Flock and Radix.
Zeta builds modern tech to underpin the banking system. Turakhia said the company offered an alternative to the archaic tech propping up the banking industry.
"Banking software is stuck in the stone ages," Turakhia told Yahoo Finance UK. "Zeta is a bank in a box, with a a modern, cloud native platform.
"[Banking software] is the least disrupted space, but also the most valuable."
Zeta's customers include 10 banks and 25 fintechs across eight countries: Brazil, the UK, Spain, Italy, the US, India, Vietnam and the Philippines.
Sodexo, a company that provides employee benefits and rewards, is one of Zeta's biggest clients. Sodexo invested $30m in 2018. Zeta's other largest contract is with India's largest private sector bank, HDFC.
A large chunk of the latest Softbank investment will be used to provide additional products for banks such as slicker buy-now-pay-later loans and credit cards. Zeta will also expand its sales and marketing teams, growing from 55 people to about 250. The company plans to build a larger presence in US and London over the next six months.
Zeta is hoping to win business among the world's top 300 banks and wants to draw the majority of its revenue from the US within the next five years.
"Banks currently spend $200bn to $300bn on their IT," Turakhia said. "The goal is to try to direct a significant portion of that to Zeta's platform. It's a sizeable spend across the globe, and our plan is to try and leverage as much of that as we can."
Turakhia said an IPO was a likely "at some point".
"My expectation is perhaps five years from now, but it's too early to predict," he said. "It won't be in the near-term."
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