SME-focused neobank Judo Bank has closed a humongous $230 million funding round, making it Australia’s latest fintech unicorn, and the first of the Aussie challenger banks to reach the coveted $1 billion valuation.

The funding follows a raise open to only existing investors, including the likes of Myer Family Investments, Bain Capital Credit, and the Abu Dhabi Capital Group.

Founded in 2015 and launched in 2018, Judo started life as an alternative lender for SMEs. It secured its full banking licence in April last year, added additional banking services, and re-branded as Judo Bank.

In July last year, the fintech raised $400 million in the biggest-ever single funding round in Australian history.

Judo Bank’s existing backers have stumped up $230 million in a third round capital raise that raises the neobank’s post-money valuation to more than AU$1 billion.

The challenger bank targets lending to small to medium-sized enterprises (SMEs) and has now raised more than $770 million in capital since its launch in March 2018, including a record $400 million second-round equity raise in July last year.

Co-founder and co-CEO, David Hornery, said the global economic uncertainty caused by covid-19 meant that only existing shareholders took part in the latest capital raise.

Judo Bank’s existing investors include Bain Capital Credit, Myer Family Investments, the Abu Dhabi Capital Group, Ironbridge, SPF Investment Management, OPTrust, and Tikehau Capital.

“The support we’ve received for our third round, at an increased valuation to our second round capital raise last year, underscores the confidence and commitment our existing investors have in Judo, particularly at a time of extreme volatility in global markets, that has impacted all bank valuations,” Hornery said.

Judo Bank's valuation has pushed through $1 billion after its latest capital raising showed investors were willing to put a higher price on the business-focused challenger bank.

Judo, founded by former bankers David Hornery and Joseph Healy, will on Thursday say it has closed its third funding round, which raised an extra $230 million in capital.

The raising took place against the backdrop of the coronavirus crisis but attracted a higher price than previous rounds, and makes Judo the latest "unicorn," which refers to a privately held start-up with a valuation of more than $1 billion.

As a result of the uncertainty created by the pandemic, Judo did not bring additional shareholders onto its register, which includes Bain Capital Credit, Myer Family Investments, Ironbridge and the Abu Dhabi Capital Group.

"The support we’ve received for our third round, at an increased valuation to our second round capital raise last year, underscores the confidence and commitment our existing investors have in Judo, particularly at a time of extreme volatility in global markets, that has impacted all bank valuations," Mr Hornery said in a statement.