Bengaluru-based fintech startup Open Financial Technologies has raised $30.27 Mn (INR 210 Cr) in a Series B funding round. The Series B was led by Tiger Global Management with participation from Tanglin Venture Partners Advisors.
Existing investors 3one4 Capital, Speedinvest and BetterCapital AngelList Syndicate also participated in the round.
The funds will be used to scale up the team, launch more products and value-added services. It will also work to expand its reach to 1 Mn SMEs in the next one year. Prior to this round, the company has raised over $7.4 Mn in funding from investors.
Open: A Neo-Bank Enabling Over 1 Lakh SMEs
Open was founded in May 2017 by serial entrepreneurs Anish Achuthan, Mabel Chacko and Ajeesh Achuthan along with ex-TaxiforSure CFO Deena Jacob. The startup offers a digital banking service for small businesses. The accounts are linked with startup’s artificial intelligence (AI)-driven accounting engine that automates bookkeeping and expense management, along with enhanced APIs to drive his/her banking needs.
The company claims to have over 1 lakh SMEs and processing over INR 35,000 Cr in transaction. Open also claims that it adds over 20K SMEs every month.
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.”
The company is set to launch two new products:
- Open+ card, a business credit card with a 30-day interest-free credit line, for venture backed startups
- Layer, a unique programmable bank account for developers
Further, Open is also enhancing its API banking suite with the introduction of Layer – a programmable bank account that will enable developers to control money programmatically, build their own features on top of the bank account and securely integrate with other services.
Neo-Banking In India
In India, neo-banking is slowly gathering the industry’s attentions. Startups in this sector reportedly don’t need a license to run, and operates just like Paytm Payments Bank. However, they will have to comply with the regulations under the Payments and Settlement act. They keep the customer’s money in the nodal bank account of the bank with which they have tie-ups.
According to a 2017 report by Allied Market Research, the collective customer base of neo banks is expected to grow at a CAGR of 50.6% from 2017-2020. Another Indian startup in the space is the mobile-only bank, Digibank, launched in April 2016 by DBS Bank. This app is also integrated with AI-driven services.
A report by NASSCOM further forecasts the Indian fintech software market to touch $2.4 Bn by 2020, from the current $1.2 Bn.