The news: British neobank Zopa is reportedly in talks to raise around $100 million ahead of a planned IPO, according to Sky News.
The funding round is expected to give Zopa a valuation of more than the approximate £750 million ($882 million) price level it had almost a year ago, Sky said, citing an unnamed source.
Road to going public: Founded in 2004, Zopa originally specialized in peer-to-peer (P2P) lending but has since branched out to offer traditional banking products.
Zopa defies downbeat market: The digital bank continues to successfully attract interest from investors despite a wider slowdown in funding for fintechs this year.
Analyst’s take: “Zopa has claimed it has turned a profit, albeit a small one, under £1 million. Although it’s one of few neobanks that can claim that fame, achieving sustainable profitability will be its next challenge,” says Insider Intelligence principal analyst Tiffani Montez.
“Going after more investment in this environment will be expensive and will only stretch its runway toward sustainable profitability so far. Unless it can generate more significant, sustainable profitability, an IPO in this environment will be risky.”
This article originally appeared in Insider Intelligence’s Banking Innovation Briefing—a daily recap of top stories reshaping the banking industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
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