Bengaluru-based neo-banking startup OPEN has raised ₹210 crores in Series B funding from Tiger Global and Tanglin Venture Partner Advisors. Existing investors Speedinvest, Better Capital AngelList Syndicate and 3one4 Capital also participated in the funding round.
The startup plans to use the funds to expand operations and reach 10 lakh small enterprises in the next year. OPEN also plans to launch new products viz OPEN+ card and Layer for its customers. It aims to process banking for more than 10 lakh businesses.
Founded by Anish Achuthan, Mabel Chacko and former CFO of TaxiforSure Deena Jacob in 2017, the startup offers digital banking services to startups and small and medium enterprises that includes a current account packed with tools for bookkeeping, invoices, moving money, and accessing credit. It has developed an online platform for banking and intercompany settlement.
The customers’ accounts are linked with OPEN’s AI-driven accounting engine to automate bookkeeping and expense management. It also provides APIs to integrate customized solutions for banking needs.
Anish Achuthan, CEO, OPEN said, “This funding will help us accelerate our target of simplifying business banking for more than 1 million businesses at a greater pace and also launching new products like the OPEN+ card and Layer that will enhance our value proposition for small businesses.”
Currently, Open works with 1 lakh small enterprises and handles transactions over ₹35,000 crores. The crisp growth hacking techniques have enabled them to add 20,000 small and medium enterprises to their customer base every month. At this rate of traction, the target of providing services to 1 million customers can be achieved in the next 4 years.
However, the recent funding will speed up the customer acquisition process and the target could be achieved in a shorter span of time.
Earlier in February, Beenext Ventures invested ₹32 crores in Series A funding round in the startup. PayU India CEO Amrish Rau and managing director Jitendra Gupta have also invested ₹1.75 crores in a seed round in the startup. With this latest funding, the total funding of the two-year-old startup stands at ₹261.8 crores.
The neo-banking sector in India is growing slowly. The startups in this sector can operate without a proper banking or NBFC license but have to comply with the regulations under the Payments and Settle act, just like Paytm Payments Bank. They are required to keep the customer’s money in a nodal bank account of the bank that they partner with.
The collective customer base of neo-banks is expected to grow at a CAGR of 50.6% from 2017 to 2020, according to a report by Allied Market Research. The Indian fintech software sector will double its value to touch the ₹16,800 crores mark by 2020 which currently stands at ₹8,400 crores, according to a report by NASSCOM.