The SME-focused neobank is also in talks with other investors including Tiger Global to raise the aforesaid amount. The round could also see the participation of homegrown venture capitalist 3one4 Capital. Both Tiger Global and 3one4 Capital are Open’s existing investors.
“Temasek has been finalised as the lead investor…..others are still negotiating the deal with the company, which is expected to be finalised in a month’s time,” one of the persons mentioned above said on condition of anonymity. “This is likely to be a $100-million oversubscribed round.”
Post investment, the startup is expected to be valued at over $600 million.
When contacted, the Temasek spokesperson and Open co-founder and COO Mabel Chacko declined to comment on the development. Meanwhile, separate emails sent to Tiger Global and 3one4 Capital did not elicit any response.
Founded in 2017 by serial entrepreneurs Mabel Chacko, Ajeesh Achuthan and Anish Achuthan, Open offers a neobanking platform that helps over 10,00,000 SMEs and startups to automate and run their finances effectively. The startup claims to have all the tools that help businesses send and receive payments, automate their accounting, expense management, combined with developer-friendly APIs that help SMEs integrate banking into their business workflows.
Open had last raised $30 million in its Series B round led by Tiger Global about two years ago. In total, it has garnered a total of $35 million in funding so far and its other investors include Speedinvest, Beenext, Recruit Strategic Partners, AngelList, Unicorn India Ventures, and Tanglin Venture Partner Advisors, among others.
Over the last three years, India has seen the rise of neobanks with firms mushrooming to ride on the growth story. These include names such as 811 by Kotak, Yono by SBI, RazorpayX, and NiYo, among others.
A neobank is a new-age bank that provides financial services to customers but operates online and has no physical existence anywhere. Overall, the growth of neobanks in India and globally has been accelerated by the pandemic.
Last week, Novo, a neobank for small businesses, startups and freelancers raised $40.7 million in its Series A funding round from Valar Ventures along with Crosslink Capital, Rainfall Ventures, Red Sea Ventures and BoxGroup.
Meanwhile, in May, epiFi raised $12 million in its Series A round from its existing investors Ribbit Capital and Sequoia Capital. A month prior to that, Razorpay raised $160 million in its Series E financing round at a valuation of $3 billion. The funding was led by Sequoia Capital India and Singapore’s sovereign wealth fund GIC. In a statement, the company said that its banking platform, RazorpayX, saw 400 percent growth in transaction volume in the last 12 months of COVID.