After raising $300 million in a SoftBank-led round in 2021, the UK neobank Soup has closed a deal to put more funds in its coffers. The company, which provides consumers with loan services, credit cards and savings accounts and has some 850,000 customers, has raised £75 million (about $93 million), an equity investment that it plans to use both to develop new financial products. , to attract more customers and make acquisitions.
Interestingly, Zopa is not disclosing a lead investor, but CEO Jaidev Janardana confirmed to us in an interview that it was an internal round of existing investors; that some of those involved included investment firms Uprising and Augmentum; and that SoftBank was not in this round but remains an investor and board member. The company also said in a statement that the funding “consolidates and markedly enhances” its unicorn status: the $300 million round in 2021 was done at a $1 billion valuation, but it does not provide an actual valuation with this latest round. .
There are some signs that this round took a while to close. There were rumors of the fundraiser in September of last yearand at the time it was said that Zopa was looking to raise around $100 million.
Those reports also noted that this could be the last fundraiser for the company before going public, though Janardana declined to comment on timing, given the current state of the public markets and the fact that Zopa, in his words You have no pressure to do so at this point.
This latest injection of funds comes at a key time in the UK economy.
The IMF released a report earlier this week in which foretold that the UK would be the only major economy to shrink in 2023. But despite that dubious distinction, and amid a lingering threat of recession, challenger banks appear to continue to find traction with consumers and businesses seeking better rates. and faster services than those being offered by more traditional banks.
The company says it surpassed £3bn in deposits in its savings business this month, with £2bn in its lending business (with £8bn in loans approved in total) and some 400,000 credit cards in circulation. . It currently has some 850,000 customers in the different sections of its business. Revenue figures are not disclosed, but the company says they have doubled in the past year. It is also on track to be profitable for the full year in 2023, the first time since it was first founded 17 years ago.
Regardless, the growth of the lending and financial services market has definitely slowed, Janardana said, with 2022 decidedly back to “pre-pandemic levels” of activity.
“Demand for credit has fallen…and overall when I look at the demand for loans in the industry, there’s only been 5% to 10% growth in the last year,” he said, citing a big drop. in discretionary spending as one of the key factors. reasons for that. “But this hasn’t impacted us as much as it has others.” LendingClub, another large lending company in the country, cut about 14% of staff in January.
“Customers are going digital and looking for more options instead of going to a bank,” he continued. “May more informed consumer behavior [means] our volumes continue to grow.”
Acquisitions and new products will aim to capitalize on that, he said, while helping the company diversify its business at the same time. Areas Zopa would like to explore include creating products aimed at businesses, and it also wants to expand further into payments along with its credit, loan and savings products.
The current market is definitely seeing a lot of pressure on valuations and the sea of fintech startups that have been funded over the years are also finding it harder to raise more money, giving Zopa (and others) the opportunity to acquire those assets. However, Janardana noted that £75m should not be seen as the upper limit for those valuations, as he is likely to close deals that will be combinations of cash and stock, and that he still has plenty of money in the bank from previous rounds. . He added that investors are also willing to put up more for the most interesting deals and that so far Zopa has yet to explore raising debt.
