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ZetaCEO Bhavin Turakhia says his ambitions are bigger for his fifth venture, including scaling rapidly and acquiring market share over the next 4-5 years. While Zeta has not turned profitable yet, the serial entrepreneur aims to turn it EBITDA-positive by 2024.
Founded by Turakhia and Ramki Gaddipati in 2015, the banking tech company was valued at over $1 billion in the Series C funding round led by SoftBank. Zeta provides banks technology infrastructure to manage customer payments, deposits, and embed offerings from fintech firms. Turakhia spoke with BusinessLine about the company’s growth plans after the recent strategic investment by MasterCard. Excerpts from the interview:
Zeta has received two strategic investments — from Sodexo and, recently, Mastercard. Do you prefer strategic investment over institutional funding?
Typically, in strategic investments the capital amount tends to be lower and the partnership that comes with it is far more important. So, take the case of MasterCard, they put in a small amount of capital in the context of the entire funding round, but they have signed a global strategic alliance agreement with us, where both we and Mastercard will recommend each other as the preferred vendors for the banks and fintechs we work with in India, Asia-Pacific, North America, Europe, Latin America, etc. So, that strategic partnership is what is far more relevant. Mastercard gets market access from us because we are constantly selling to these banks and fintechs and so on.
On the other hand, institutional investors come in from a return-on-capital standpoint. But even there, the partner we have selected, SoftBank, have deep inroads into several fintechs across the globe. This can be leveraged by us to create meaningful financial service programmes for those fintech companies and their corresponding customers. So there is a strategic element to an institution investor too.
At the announcement of Zeta’s latest funding round, you mentioned your focus on expanding in North America? What is your analysis of the market?
North America constitutes about 30or 35 per cent of the global revenue opportunity in this space. So it is the largest single country market; it’s larger than the next few countries combined, in terms of size and scale. Our goal is to win a significant amount of market share in North America before we start exploring other markets. In terms of customers, there are about 60 banks and a few hundred fintechs in North America that we are targeting. North America and India are our primary target markets right now. Later, we will also start operating in Latin America and Europe.
What are the latest revenue numbers of Zeta? Has the company turned profitable?
We have more than 15 million cards on our platform. We have signed contracts that represent 40-50 million cards that will play out over the next three to four years. We’ve grown to about 1,400 employees. Our current thought process is to reach EBITDA positive by 2024... but we are not profitable today.
As you plan to expand internationally, will you make acquisitions?
No, we’re not actually looking at any acquisitions. I think we’re still at a phase where a lot of the focus is on investing in our own platform development. We might look at acquisitions post the subsequent funding round. But that is two to three years from now. At this point, all the fundraise is intended to be an internal investment.
You haven’t raised external capital funds for your previous ventures. But your strategy seems to have changed with Zeta. Why did you decide to raise institutional funding?
The plan is just much bigger this time; my previous companies have been relatively smaller in comparison. With Zeta, the scale of the ambition is substantially bigger. We do have revenue and profit focus but, for the next four or five years, we want to invest behind scaling rapidly and acquiring as much market share as we can. Between me and my co-founder, we hold about 65 per cent stake in the company. In the future rounds, there will probably be some level of dilution, but I don’t anticipate it will drop below majority shareholding.
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