UK fintech startup Zopa Bank raises $92 million to accelerate growth

Zopa, a UK-based digital banking startup that started as a peer-to-peer lender, has raised 75 million pounds ($92.40 million) as the company pivots to becoming a digital bank. The round was backed by existing investors excluding major backer Softbank.

In a statement on Thursday, Zoma said the latest funding “cements” its status as a unicorn with a valuation of $1 billion. Zopa will use the fresh funds to go grow its current products as well as expand into the small business lending space.

In conjunction with the funding news, Chief Executive Jaidev Janardana said the company is postponing its plan for an initial public offering (IPO) until a future date due to the challenging economic time. “During a challenging economic time, this is validation of our economic performance,” Janardana said.

The IPO “was never a destination,” Janardana said. “It’s a milestone on the way. We’re looking for the right opportunity.”

Janardana also said that the company is also considering raising an additional 25 million pounds to 100 million pounds of Tier-2 debt later in the year to shore up its balance sheet, adding that the plans are contingent on the cost of debt.

We covered Zopa back in 2021 after it raised a $300 million investment led by Softbank Vision Fund 2, a venture arm of Japanese conglomerate SoftBank Group. However, Softbank sits out of the current round due to a record loss.

Founded in 2005 by Dave Nicholson, Giles Andrews, James Alexander, Richard Duvall, and Tim Parlett, Zopa started out as a pioneer in p2p lending before it transitioned to online lending. Today, Zopa Bank and its P2P business run alongside each other. To date, Zopa has lent out over £6 billion to over half a million people across the UK.

In 2020, Zopa launched Zopa Bank, meaning it could offer banking services like fixed-term savings backed by FSCS protection. During the same year, Zopa also launched a credit card to help customers take control of their finances. The startup is also hoping to capture a larger share of the UK retail banking market and take on giants like Barclays and HSBC. So far, Zopa has netted $961 million in deposits and attracted 150,000 credit card customers.