temasek and general atlantic in talks to back indian neobank open

Open, a Bangalore Neobank, Nears $100 Million Funding Round

Open, a neobank headquartered in Bangalore, is reportedly nearing the completion of a significant funding round. Discussions are in their final stages to secure approximately $100 million in new investment, according to sources with knowledge of the negotiations.

Series C Funding Details

Temasek, the sovereign wealth fund of Singapore, and General Atlantic are poised to jointly lead the Series C financing. This round would assign a pre-money valuation of $600 million to the Indian startup. This represents a substantial increase from its previous valuation of around $150 million achieved during its Series B funding two years prior.

Several existing investors are also considering participation in this new funding round. These include Tiger Global, PayPal – despite recently ceasing domestic operations in India – as well as tech giants Google and Amazon.

Reporting and Potential Changes

The size of the impending funding round was initially reported by the Economic Times, which also identified Google and Amazon as potential investors. It’s important to note that the round has not yet been finalized. Therefore, the terms are subject to change, and not all prospective investors may ultimately contribute.

Anish Achuthan, the founder and CEO of Open, has not yet provided a comment regarding these developments.

Open’s Services and Business Model

Open functions as a neobank, providing a comprehensive suite of financial services comparable to traditional banks. However, it also incorporates specialized tools designed to address the unique requirements of businesses.

The startup’s offerings encompass features such as automated account management, a payment gateway, business credit cards, automated bookkeeping, cash flow oversight, and solutions for tax and regulatory compliance.

Collaboration Between Banks and Fintechs

Recognizing the limitations of serving the entire market independently, numerous Indian banks have begun to forge partnerships with fintech companies in recent years. This strategy aims to broaden their reach within the South Asian nation.

Analyst Insights on Banking and Fintech

Analysts at Bank of America recently noted that banks are actively working to protect their market position. They are doing so through various initiatives, including ecosystem development (led by HDFC Bank), embracing fintech collaborations (led by ICICI Bank), and enhancing the overall digital experience (led by Kotak and Axis).

However, the report suggests that banks are still playing catch-up, lacking the specialized focus and expertise in areas like banking super apps and APIs. Fintech revenues currently represent approximately 10% of private banks’ fee income, but are projected to grow more than threefold within the next three years.

The analysts believe that while banks aim to control customer relationships, success will likely be limited to specific market segments.

Shifting Engagement Strategies

Recent months have seen some banks reassessing their approaches to engaging with neobanks, as reported by the Indian news and analysis publication, the CapTable.