The funds, which were handed over on Thursday along with a press release announcing them, would be used to help the bank meet its capital needs and to make merger and acquisition (M&A) dealmaking easier.
“Today’s equity round underscores the support of our investors despite the challenging economic environment,” said Zopa CEO Jaidev Janardana. It is a resounding affirmation of Zopa’s profitable, ethical, and sustainable lending approach, as well as of our strong unit economics and goal of being the best bank in Britain.
The bank had many successful months in 2022, and 2023 is forecast to be the first time for Zopa that the full year would be profitable.
After another U.K. digital bank, Monzo, went closer to achieving that objective earlier this week, it was noted that “few neobanks have reached the golden grail of profitability.”
Fewer than 5% of neobanks worldwide, according to research released in May by Simon Kucher and Partners, were profitable, “pointing to the growth-before-profit ethos that has reigned supreme in the industry from the early days,” the report’s authors stated.
An important turning point for the industry occurred last year when some digital banks, including Zopa, started promoting their profitability.
In April of last year, Janardana stated during a lecture at the Innovate Global Finance Summit that Zopa had achieved profitability just 21 months after receiving its U.K. banking licence.
When the firm announced that its deposits had reached more over £2 billion ($2.47 billion) last year, it reached yet another significant milestone. According to a news release issued by Zopa on Thursday, that amount has now surpassed £3 billion ($3.7 billion).
“Zopa’s objective is to make the billions in “zombie money” sitting dormant in U.K. current accounts work harder,” the bank stated in August. “Rising inflation, energy prices, and rent rises placing enormous strain on household budgets.”
As a peer-to-peer lending service at the beginning, Zopa has been around since 2005. After raising $300 million at a $1 billion value in October 2021, it rose to prominence. It introduced a product to compete in the crowded buy now, pay later (BNPL) market last year.
