Zeta valued at $2B in new funding

Zeta, a leading provider of banking software for banks and fintech startups, has secured $50 million from a strategic investor at a valuation of $2 billion.

This new investment from Optum, an American healthcare company, represents a 70% increase in Zeta’s valuation from its previous $1.15 billion valuation in 2021. This valuation jump follows a $250 million funding round led by SoftBank Vision Fund 2.

Established in 2015 by Bhavin Turakhia and Ramki Gaddipati, Zeta assists banks in leveraging modern technology and cloud infrastructure to launch and manage credit cards, checking accounts, and loans.

Turakhia explained, “In the banking sector, a significant percentage of institutions still rely on mainframes that were created decades ago. We are witnessing a gradual shift towards cloud computing, similar to the evolution from managing data centers to utilizing services like AWS and Azure.”

Zeta’s platform currently serves 25 million accounts, with contracts in place to add another 25 million. The company’s primary customer in India is HDFC Bank, the country’s largest private lender, which utilized Zeta’s technology to revamp its PayZapp digital payments platform.

The U.S. is Zeta’s largest market, followed by India, where it generates annual revenue exceeding $50 million. The company is engaged in discussions with several major U.S. banks, although these partnerships may take time to materialize.

Zeta has invested around $400 million in its platform since inception and aims to achieve profitability by March 2026. Their offerings include modules for core banking, payment processing, fraud detection, and customer engagement.

Turakhia envisions capturing 25% of the market share in the next decade, a feat unprecedented in an industry dominated by acquisitions made decades ago.

Zeta’s co-founder, Turakhia, began his entrepreneurial journey in 1998 with his brother Divyank. Over the years, they sold four internet businesses to Endurance for a total of $160 million. Zeta marks Turakhia’s third startup, following the backing of his business-email provider, Titan, by Automattic in August 2021.

With 1,700 employees spread across the U.S., Middle East, and Asia, Zeta continues to expand its presence globally.

Turakhia emphasized that the startup was not in immediate need of capital: “Most likely, this $50 million investment will remain in the bank. This investment serves as a validation of our journey.”