Zeta, a prominent provider of banking software for banks and fintech startups, has secured a $50 million investment from a strategic investor, placing its valuation at $2 billion.
This latest investment comes from American healthcare company Optum, marking a significant 70% increase from the Bengaluru-based startup’s previous valuation of $1.15 billion in 2021, during which it raised $250 million in a round led by SoftBank Vision Fund 2.
Founded in 2015 by Bhavin Turakhia and Ramki Gaddipati, Zeta aids banks in utilizing modern technology and cloud infrastructure to launch and manage credit cards, checking accounts, and loans.
“In the banking sector, 60%-70% of institutions still rely on mainframes—many of which were created before some of us were even born,” Turakhia mentioned in an interview. He likened this to the industry’s gradual shift to cloud computing, where banks initially managed their own data centers before adopting services like AWS and Azure.
Turakhia anticipates a similar evolution in core banking technology, although with higher stakes, as it involves replacing what he calls “the heart and soul of the bank”—the systems that process payments and manage accounts.
Zeta, which also counts Mastercard among its supporters, currently serves 25 million accounts through its platform and has contracts to add another 25 million. Its flagship client in India is HDFC Bank, the country’s largest private lender, which has also utilized the startup’s technology to revamp its PayZapp digital payments platform.
The startup collaborates with Pluxee, a global corporate benefits provider, and Sparrow Financial, a U.S.-based credit card issuer.
The U.S. remains Zeta’s largest market, followed by India, where it generates annual revenue exceeding $50 million. The startup is in discussions with several major U.S. banks, though Zeta’s executives caution that some of these partnerships may take years to materialize.
Zeta has invested approximately $400 million into its platform since its inception and aims to achieve profitability by March 2026. Its offerings include modules for core banking, payment processing, fraud detection, and customer engagement.
“Over the next decade, we intend to capture 25% of the market share,” Turakhia stated. “This has never been accomplished before, as the majority of market share in this industry was secured decades ago, primarily through acquisitions.”
Turakhia, along with his brother Divyank, started his first venture in 1998. Together, they sold four internet businesses to Endurance for $160 million. Zeta is the third startup Bhavin has co-founded since then. In August 2021, WordPress parent company Automattic backed Turakhia’s latest venture, business-email provider Titan, valuing it at $300 million.
The company boasts a workforce of 1,700 employees across the U.S., Middle East, and Asia.
Turakhia mentioned that the startup didn’t need to raise additional capital: “In all likelihood, this $50 million is going to sit in the bank […] This investment reflects a reaffirmation of our journey.”
Photo: techcrunch
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