The first US-based neobank, Varo Bank, was created for millennials and young people who are dissatisfied with traditional banks. Now, the national charter digital bank has raised a whopping $510 million funding in a Series E round, which triples its valuation.
Attains unicorn status
The oversubscribed investment round was led by hedge fund Lone Pine Capital along with a slew of new investors — Declaration Partners, Eldridge, Berkshire Partners / Stockbridge, Marshall Wace and accounts managed by BlackRock. Existing investors including Warburg Pincus, The Rise Fund, Gallatin Point Capital, and HarbourVest Partners also participated.
With this round, the valuation of Varo Bank accounts for $2.5 billion. Notably, it was $700 million post its previous fundraising round wherein it secured $63 million.
The digital bank plans to use the new funds to accelerate Varo’s customer growth and support additional product and technology innovation investment.
Witnessed whopping growth
Since its debut in 2017, Varo Bank has extended premium bank accounts with no minimum balance requirement, monthly account, or overdraft fees, as well as high-interest savings accounts.
Varo’s offerings include a full suite of bank products to advance financial inclusion and break down systemic barriers to wealth creation. Since it obtained its bank charter, the fintech’s revenue has tripled and expanded its suite of innovative financial products to include Varo Advance, a short-term line of credit, Varo Perks cashback rewards, and the forthcoming Varo Believe credit building credit card program.
Also, the employee count has nearly doubled, with the company expanding into a third hub in Charlotte, North Carolina.
Notably, Varo Bank is the latest digital bank to attain a multibillion-dollar valuation and millions. This was possible as it attracts millions of new customers, especially youngsters from traditional banking. Unlike rivals such as Chime who has partnered with FDIC-backed banks, Varo is completely regulated and has won the first national charter last year.