Google has become the latest high-profile investor to support the neobanking platform by investing in Bangalore-based Open.
Open On Tuesday, it said it had raised $100 million in its Series C funding round. The tour was led by Singapore’s sovereign wealth fund Temasek, joined by Google and Japan’s SBI Investment (not to be confused with SoftBank or India’s SBI bank), as well as existing investors Tiger Global and 3one4 Capital.
According to a source familiar with the matter, the new round of the four-year-old startup’s all-time boost to $137 million, the Open is valued at $500 million. TechCrunch reported in June that Open is in talks with Temasek and Google, among others. raise $100 million.
Another source close to the matter said that another round is already underway and investors like Visa are likely to participate.
Open runs a neo-bank It offers almost all the features of the bank with additional tools to serve the needs of a business, as well as small and medium-sized businesses. Millions of small and medium-sized businesses in India struggle with maintaining multiple bank accounts, accounting for their daily expenses and distributing payouts to employees.
The startup, which has partnerships with more than a dozen top banks in India, says more than 2 million businesses use its platform.
In recent quarters, Open has expanded its offerings. Anish Achuthan, founder and CEO of Open, said in an interview with TechCrunch that the startup now provides the neobanking technology to banks in a white-label licensing arrangement and then sells it to customers.
“We help banks build their own new-age digital banking platform,” he said. The startup is now also helping other fintech startups build their embedded finances or other fintech solutions, he said.
“We realized we had the infrastructure needed to help other fintech businesses create their own cards and other digital banking services,” he said. Open calls this part of its business offering Zwitch.
The growth of Open in recent years and many other startups opening and innovating in this category has dramatically changed the relationship between banks and fintechs. Just a few years ago, the fintech founders told TechCrunch that most banks in India were skeptical of neobanks and it was very difficult to convince anyone of a partnership.
“Neobanks stands out as platforms that digitize banking or bank-like services for millennials and SMEs. Analysts at Jefferies wrote in a report last month that 4 of the world’s largest new banks are worth $100 billion, and Indian fintechs got a head start with things like Open, RazorpayX, Fi and Jupiter.
“In fact, many Indian fintechs are now planning to expand from 1-2 platforms to neobanks in 3-5 years. Established banks/NBFCs partner with them. It took a while to make money,” they added.
This last part is still a big question for the industry. At a virtual conference hosted by Razorpay last year, Pine Labs CEO Amrish Rau jokingly commented that between himself and CRED founder Kunal Shah, these firms support every neobanking initiative in the country in the hope that they will find a way to make money. one day in this category.
“The challenge here [for neobanks aimed at millennials] Payment fees are negligible in India, BNPL is still small and gets mostly non-premium customers. The quality of the relationship and the use of partnerships for cross-selling will ensure success. On the other hand, SME-focused neobanks engage with business customers through their ability to provide solutions such as automatic invoicing, collections/payments, accounting, inventory and sales management, taxes, and in some cases current deposit interest (Banks cannot pay interest). This can help boost and foreground monetization prospects, Jefferies analysts said.
Open, which employs around 500 people, said it plans to deploy capital to expand its offerings and also expand into international markets such as Southeast Asia, Europe and the United States, Achuthan said. . We’ve already partnered with a bank in Vietnam and a bank in the Philippines,” he said. “The entry point there is corporate business.”
The startup is also monitoring strategic M&A opportunities in India and other markets and said it would like to recruit more talent.
“The team at Open combined deep domain expertise and product-driven rigor to implement a full-fledged solution that puts SMBs at the center of a universe of innovation. This platform has set the standard for business banking and will take this full-stack approach to new neighborhoods and geographies. 3one4 Capital “We are excited to continue our partnership as Open evolves into a global fintech innovation engine,” said Pranav Pai, Co-Founder and CIO.
Open is the latest in a series of investments Google has made in India over the past year. company that is Committed to investing $10 billion over the next few years, also supported Indian startups Glance and DailyHunt. YouTube acquired social commerce startup SimSim in July this year.