Chime online bank now valued at $ 1.5 billion after another round of funding
Chime application on smartphone
Digital bank Chime tripled its valuation, officially crossing the billion dollar mark this week.
The San Francisco-based company has announced a $ 200 million Series D funding round that takes its new valuation to $ 1.5 billion. The investors were led by DST Global, which also participated in previous fundraisers, and new investors Coatue, General Atlantic, Iconiq Capital and Dragoneer Investment Group, Chime said Tuesday.
“There is a pent-up demand for more user-friendly banking services,” Chime CEO Chris Britt told CNBC. “We believe there is a better way to do this which is actually aligned with the best interests of our members.”
Online-only banking allows customers to deposit and save money on its platform and spend with a debit card at no cost. Chime earns revenue from debit card transaction fees paid by merchants. Accounts are insured by the FDIC through a partnership with Bancorp Bank. The partnership model is an increasingly popular setup for fintech startups that do not have their own banking charter.
The digital-first approach and zero-fee promise has helped Chime attract around 200,000 users per month, the company said. Chime said he now has more than 3 million bank accounts, up from 1 million last summer.
So-called “challenger” banks are an increasingly popular option for consumers who do not want traditional branch banking options. These newbie banks often cite the competitive advantage of basing their businesses on modern technology with a lower cost structure than traditional banks. Since they are online only, they also avoid the costs associated with branch maintenance.
Co-founder and CEO Chris Britt of Chime
Tuesday’s announcement marks the highest valuation for a private US challenger bank backed by venture capital. Chime’s previous $ 70 million Series C round was led by Menlo Ventures last May, with a valuation of $ 494.73 million, according to Pitchbook data.
Europe has historically led the challenger bank movement with names like Monzo, Atom Bank, Tandem Bank and Revolut collectively attracting $ 1 billion in funding and more than 2.5 million customers since 2014, according to CB Insights. UK digital bank Revolut was recently valued at $ 1.5 billion, according to Pitchbook, and it announced earlier this year that it plans to expand into the United States and Canada.
Chime’s new cash injection will allow the company to “aggressively expand” into other areas of financial services such as lending and credit, the CEO of Chime said. He also plans to expand his team from 120 to 200 by the end of the year. Over the past year, he hired Brian Mullins, former Head of Risk Operations at Square, and Aaron Plante, former Business Unit Head for Student Loans at SoFi.