Banking tech startup wins US$250m from SoftBank

[MUMBAI] Banking technology provider Zeta raised US$250 million from SoftBank Vision Fund II at a valuation of $1.45 billion, winning its first venture backing to help fuel its expansion.

The deal pushes Zeta's valuation up more than fourfold from 2019, when an investment by strategic partner Sodexo valued the startup with Indian roots at about US$300 million. Sodexo also participated in the latest round as a minority investor, Zeta said in a statement on Monday.

Zeta plans to expand in the US and Europe as banks increasingly move online and away from operating branches. It provides backbone technology for credit and credit-card processing, core banking, loans, mobile banking and personal finance management.

Banks "innovate at snail's pace," Bhavin Turakhia, co-founder and chief executive officer, said in a video interview from Dubai, where he's currently based. "Even space travel got disrupted before the banking industry."

Mr Turakhia, now 41, helped found Zeta in 2015, after launching and exiting several startups with his brother, Divyank. Mr Turakhia started coding at 10, became a millionaire by 20, and shared a billion-dollar fortune with his brother at 36 after selling multiple startups without any venture backing.

Banks and financial institutions typically work with numerous suppliers, each providing a different piece of technology for their backbone systems. Zeta wants to change that with its product that combines the various elements into one cloud-based offering. It has 10 banks and 25 fintech companies in eight countries among its customers, including India's HDFC Bank and Sodexo, whose services include employee benefit and reward programmes.

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Zeta targets the world's top 300 banks as potential clients, and wants the US to account for 60 per cent of its revenue in five years. The company plans to double its headcount in the next 12 months from about 800 currently.

"Banking software is a US$300 billion industry globally," Munish Varma, a managing partner at SoftBank Investment Advisers, said in the statement. "Most banks still employ technology which is significantly older than their customers, impacting user experience and engagement."

Mr Turakhia, who was born and raised in Mumbai, founded his first startup, domain-name registry Directi, with his brother in 1998 and sold it for US$160 million in 2014. The duo's other startups include Flock, which offers collaboration tools for enterprises, and Media.net, which they sold for US$900 million.

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