Neo-banking platform OPEN, which offers a digital banking service for small businesses, on Thursday, announced that it had raised pre-Series A funding in a round led by Unicorn India Ventures and Recruit Co. Ltd, through its investment subsidiary RSP India Fund LLC.
Existing investors fintech-focused accelerator ISME-ACE and Vaibhav Domkudwar’s BetterCapital AngelList Syndicate also participated in the round. According to sources, the funds raised are expected to be around $2 million.
According to Anish Achuthan, Co-founder and CEO of OPEN, the funding will be used to accelerate customer acquisition and growth as the company is targeting to onboard two lakh small businesses onto the platform in the next two years.
The funding will also be used to enhance the company’s core platform to launch new products on lending and wealth management using AI and financial analytics.
Founded in 2017 by Anish and Mabel Chacko, OPEN is a neo-banking startup based in Bengaluru that is focussed on small businesses, enabling them to manage cash flows, automate accounting and get easy access to credit line.
But the account opening facility is just one part of OPEN’s services. The OPEN dashboard is equipped with characteristics closer to an Enterprise Resource Planning (ERP) solution.
The account has all the tools that are required by a small business to send and receive payments, combined with an AI-based accounting engine that automates bookkeeping and expense management.
Apart from enabling the businesses to run their finances effectively, the platform also offers APIs for developers to integrate banking and payments into their business workflows.
The startup, which has about thousand customers, is also getting ready to launch an innovative business expense card with an attached credit line, called DUO, for enabling payouts and employee expense management for employees.
At present, OPEN has partnered with seven banks for powering the banking services on the platform.
Banking is broken for the 51 million small businesses as traditional business banking services have not focused on the needs of these businesses. This presents us with a large opportunity to disrupt this segment in partnership with banks.
At present, OPEN offers customers two models – freemium and paid. However, 20 percent will pay OPEN Rs 999 on a monthly basis for additional services delivered by the platform.
On the investment, Archana Priyadarshini, Partner, Unicorn India Ventures, says,
Fintech in India is one of the fastest growing sectors because technology can play an enabler in taking banking solutions at affordable rates to the unbanked population. Open’s business model of extending traditional banking services through digital route is a unique proposition within fintech, and this prompted us to lead the round.
The company has also raised investments from Citrus Pay founders Amrish Rau and Jitendra Gupta, TaxiforSure founder Apremaya Radhakrishnan, Chiranth Patil of BetaPlus Ventures, Archana Priyadarshini of Unicorn India Ventures and Vaibhav Domkudwar’s BetterCapital AngelList Syndicate.
The investment raised from Citrus Pay founders is expected to be a total of $250,000 in the startup.
Globally, neo-banking as a concept seems to be hotting up. London-based neo-bank Revolut recently raised $250 million at a valuation of $1.7 billion, while announcing expansion plans to international markets, including Asia. German neo-bank N26 too recently raised $160 million from Tencent and Allianz to expand its services to other international markets.