Tide, a UK-based fintech startup, has been granted an additional round of funding in the tune of $120 million by a global investment firm, TPG, which increased its valuation to $1.5 billion. The round, with the involvement of the existing investor Apax Partners, is also an important milestone for the company as it doubles its expansion initiatives in India and continental Europe. The new capital inflow allows Tide to underline the increased role of India in its global strategy, as half of its customer base and labor force is already located in it.

Rapid and strategic growth engine

Tide was founded in 2017. Tide has found a niche in offering financial services to small and medium enterprises (SMEs), such as payments, credit intermediation, savings, and insurance distribution. The recent round will provide a significant valuation increase over its previous valuation of $650 million in 2021, as per Tracxn. CEO Oliver Prill affirmed the new valuation, noting that the company is growing at an accelerating pace and its relevance in the global fintech environment is rising as well.

The funding round encompasses primary and secondary capital; the latter provides liquidity to the early investors and workers. Although the precise division is not known, the organization is indicative of an emerging startup ecosystem with stakeholders being rewarded on a long-term basis.

With more than 800,000 of its 1.6 million world clients residing in India, it has become Tide’s biggest market. The India CEO of this company, Gurjodhpal Singh, has highlighted the strategic significance of the region by stating that half of the global workforce of Tide is also found in this region. Although Tide is not a licensed regulatory entity, it provides working capital solutions to SMEs by partnering with approximately 25 non-banking financial companies (NBFCs).

India operations of Tide target the transformation of small businesses to the formal financial system, which is often an underserved segment of the traditional banking sector. Its platform serves as a credit and insurance product sourcing channel, making it easier and more transparent to access necessary financial tools for entrepreneurs.

Core mission and growing investors’ confidence

In addition to India, Tide is considering a further penetration into continental Europe and specifically Germany and France, where it has already introduced products. The new capital will be employed to expand operations, improve products, and invest in artificial intelligence to drive its systems. AI will be at the forefront in Customer support, fraud detection, and financial advice automation to help Tide provide a more personalized and efficient solution.

Tide has already made a profit on the UK business; however, it is still heavily invested in newer markets, thus making the company suffer losses. According to Prill, the company believes in long-term growth and is ready to incur temporary financial losses to create a strong and scalable platform.

The fact that TPG is the lead investor in Tide and the confidence the investing community is putting in fintechs as a means of reaching out to the SMEs, who have been neglected by bigger banks, is growing. The 2021 funding round of Tide saw Apax Partners, the previous leader, once again support the company. The presence of such heavyweight investors is an indicator that they believe in the business model, the execution capabilities, and the market potential of Tide.

The financing also coincides with decreased fintech valuations globally because of macroeconomic headwinds. The fact that Tide can raise capital at an extremely high valuation is indicative of its strength and differentiation in the market.

The mission of Tide is to make it easy to get financial services by small businesses. It has a platform that provides a collection of applications, such as invoicing, expense management, and automated bookkeeping, to ease administrative load on entrepreneurs. Tide allows SMEs to concentrate on growth and not on paperwork because these services are integrated into one interface.

The strategy of Tide can propel financial inclusion in India, where there are millions of informally run small businesses that operate on a large scale. Its collaboration with NBFC and insurance companies enables it to provide customized products without the baggage of a full banking license, making it responsive and deft to the markets.

Conclusion

The $120 million fundraising and the $1.5 billion valuation of Tide are milestones of the fintech industry, particularly in the specialized SME segment. Tide has the potential to emerge as a global leader in digital financial services to small businesses with strong investor support, a profitable core business, and ambitious expansion plans. The importance of India to the Tide strategy shows how the country is increasingly becoming a leader in global fintech narratives. Since Tide keeps growing and innovating, its success would open the door to more inclusive and efficient financial ecosystems in both emerging and developed markets.