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London Tech Week

Anne Boden’s Starling Bank braces for a wave of acquisitions with £130.5M funding at £2.5B valuation

Starling Bank's Founder & CEO Anne Boden
Image credits: Starling Bank

Starling Bank, the award-winning and fully licensed mobile banking platform offering personal, joint, and business accounts is today announcing it has raised £130.5M from its existing investor base. This fundraise gives Starling a pre-money valuation north of £2.5B.

“This will enable us to continue our growth and to build a war chest for acquisitions. We are looking at a number of potential targets,” a Starling spokesperson explained.

Key takeaways

Market rumour indicates that Starling Bank eyed the internal fundraise as it’s a quick and easy way of raising funds, without requiring business case presentations to new investors. The investor turnup signalled a vote of confidence in Starling by its investors.

Starling did not reveal any further details about possible acquisition targets but revealed that they have a targeted M&A strategy that’s focused on selected lending originators. Starling Bank is currently looking at several potential deals. Following this raise, Starling now has surplus capital of nearly £400M.

The bank has thus far bought the home loans portfolio from Kensington Mortgages as well as paying £50M for the buy-to-let specialist Fleet Mortgages. This raise follows an experienced opening of nearly 3M accounts, including more than 450K SME accounts which accounts for 7.5% of the UK SME banking market. The challenger bank saw its revenue increase sevenfold to £97.6M in its most recent set of financial accounts. Set to expand across Europe offering its banking-as-a-service package to businesses and banks, there only remains upside for Starling.

The idea for Starling was conceived in 2014 when Anne Boden envisioned a distinct breed of a bank. In contrast to other players, the bank was one set to respect and embrace the technological changes in the banking sector occurring at that time. The team has come a long way, receiving support from heavyweights such as Fidelity Management and Research Company, the Qatar Investment Authority and Goldman Sachs, among others, who also featured in this round.

Starling’s biggest backer, Harald McPike, the Bahamas-based media-shy investor who is thought to own just under 40% of Starling also participated in Starling’s funding through his investment vehicle JTC.

Starling Bank became the UK’s first bank to launch a Mastercard debit card made from recycled plastic. March last year saw Starling net a whooping £272M in an oversubscribed funding round, pushing its valuation to £1.1B while elevating it to unicorn status. The challenger secured an additional £50M from Goldman for its Series E funding round, which brought the total raised to £322M.

Starling won the Best British Bank award for the fourth year running at the British Bank Awards, a remarkable achievement. Furthermore, the bank won scooped up  Best Business Banking Provider, Best Current Account and Best App too. Starling’s Founder, Anne Boden, was listed in the Financial Times’ Top 100 UK entrepreneurs. The company has also launched a series of returnships, which refers to paid internships for women returning to work after a career break.

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