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Neobanking startup Zolve raises $40 million at $210 million valuation

The neobank has seen 70,000 sign-ups on its platform and has 6,000 monthly active users

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Deepsekhar Choudhury Bengaluru
3 min read Last Updated : Oct 27 2021 | 9:03 AM IST
Eight months after raising a seed funding round of $15 million, neobanking startup Zolve has raised a Series A round of $40 million at $210 million valuation. The round was led by DST Global, with participation from Alkeon Capital,  as well as existing investors Accel and Lightspeed Venture Partner.

Founded by Raghunandan G, who earlier co-founded ride hailing startup TaxiForSure and sold it to Ola for $200 million, Zolve is targeting students and working professionals who move between countries. It started operations in December 2020, but the neobanking platform was opened to users in August this year.

“20 million people migrate each year across the world. When a person moves from one country to another, their credit history and behaviour is not transferred to the new place of domicile. This creates problems for them when they want to apply for a credit card, take a loan and other financial products,” said Raghunandan.

In the future, the startup plans to offer services like remittances and investment in stocks across borders. It has begun by targeting US, Australia and Canada bound students and working professionals, but will look to expand its market to the Indian diaspora and migrants from other countries. The company puts its total addressable market size at $80 billion.

At present, the neobank has seen 70,000 sign-ups on its platform and has 6,000 monthly active users (MAUs). It wants to hit the 250,000-MAU mark over the next one year.

Raghunandan said, “Our customer acquisition cost (CAC) currently is at $10. We recoup that in the first month of usage itself through the interchange fee of 1.6 per cent as the average card spend of a customer in a month is $1,500. By selling a few more financial products, we can easily make around $1,000 per year on a single customer.”

Although the company is partnering with a US-based bank to offer credit cards, it will bear 90 per cent of the risk in case of a default while also taking the lion’s share of revenue earned. However, there have been 100 per cent monthly payments for the past two months that the platform has been operational. 

With the money from the latest funding, Zolve intends to enhance the user experience, allowing customers to open their US bank accounts in minutes. Moreover, the funds will be used to speed the expansion of the service to more countries, marketing and hiring talent in India and the US.

“We had just spent $2 million of the $15 million raised in the seed round when we were approached by a lot of investors. Although we did not really need more money at this point, the experience of the new investors with global fintech companies like Robinhood, Nubank, Revolut and Chime is something we wanted to capitalise on,” said Raghunandan.
Banking on migrants

Founder: Raghunandan G, TaxiForSure co-founder
Founded in: December 2018
Sector: Neobanking
Monthly Active Users: 6,000
Customer Acquisition Cost: $10
Funding: $55 million
Valuation: $210 million
Investors: DST Global, Alkeon, Accel, Lightspeed India

Topics :Neo-BanksFundraising

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