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London digital bank Zopa becomes a unicorn, hits £220M funding

London-based digital bank fintech Zopa has announced to have secured £220 million as their latest fundraise. The investment was led by Japan’s SoftBank Group with participation from Chimera Abu Dhabi, as the lender looks to grow its market ahead of a possible listing by 2022. 

This is the company’s most significant funding round to date and was also supported by existing investors, including Silverstripe, Northzone and Augmentum.

London-based neobank Zopa offers peer-to-peer (P2P) lending service, pioneering auto finance solutions and more. The funding round marks Zopa’s entry into the unicorn club with a valuation of around £750 million ($1.03 billion).

The funding will be used to meet the capital requirements of Zopa bank’s rapidly growing balance sheet. Recent growth has been fuelled by the continued expansion of Zopa’s suite of digital-first financial products and has attracted some of the smartest and brightest talent from across the industry.

Zopa was founded in 2005 by Giles Andrews, James Alexander, Richard Duvall, David Nicholson and Tim Parlett. In nine months of gaining its full bank licence, neobank Zopa was successfully launched Fixed Term Savings accounts and an innovative credit card to UK consumers.

The digital bank has already attracted over £250 million in deposits. Also, it is a top 10 credit card issuer in the UK in terms of new customers. It puts Zopa in a uniquely strong financial position. 

It also holds stakes in OakNorth, which gives to SMEs, and digital banking app Revolut. In July, it soared to a $33 billion valuation after an $800 million funding round led by SoftBank.

Jaidev Janardana, CEO at Zopa said: “In a very crowded ecosystem that often focuses on current accounts or other free money management offerings, Zopa meets customer needs by focusing on how they borrow and save, the two things that have most impact on their finances.”

“Softbank Vision Fund 2’s investment into our future is a clear validation of Zopa’s responsible, sustainable and profitable approach to lending, our strong unit economics, and our vision to build the UK’s strongest performing bank with the most happy customers.”

Sourav Sen, investor for SoftBank Investor Advisers added: “We believe Zopa’s fast-growing market penetration reflects high customer demand for adaptable financial services within a usable platform that can be customized to their specific needs. Zopa is fast emerging as a leading player in the UK’s nascent neo banking sector and we are proud to partner with Jaidev and the team on this journey.”

Minister for Investment Gerry Grimstone added: “Softbank’s investment in Zopa’s digital banking platform is a testament to the UK’s enduring strength as a global hub for investment, built on our competitive economy, cutting-edge innovation and world-leading capability across areas like science, services, and research and innovation. The Global Investment Summit will demonstrate how we can use inward investment to nurture technological developments and propel our economy towards a more prosperous, exciting future.”

Reportedly, the funding round sets Zopa on track for its initial public offering in London as soon as the fourth quarter of next year. Further, the digital bank also intends in the next year to open into the booming BNPL market in the UK.