Varo Bank Raises $510 Million in Oversubscribed Funding Round
FinTech’s “megaround mania” continues as Varo Bank has just announced an oversubscribed $510 million funding round. The Series E was led by new investor Lone Pine Capital while Declaration Partners, Eldridge, Marshall Wace, Berkshire Partners / Stockbridge, and others also participated. This comes after the bank raised a $241 million Series D in June 2020 followed by a $63 million corporate round in February 2021.
Varo’s latest funding comes just over one year after the company was awarded a national bank charter, making them the first all-digital bank to do so. Since then, the company has continued to grow its core offerings while also introducing new features and products. For example, this past spring, Varo introduced their Varo Believe program that helps customers build credit while avoiding interest charges or missed payments. Elsewhere, the bank has also brought a payroll advance feature, cashback rewards programs, and more to its lineup, all within the past year.
Notably, Varo has also seen significant growth both in its number of users and employees. According to the company, customers now have more than four million open accounts — up from the three million reported in February. Meanwhile, the bank’s staff has doubled over the past year and the company has opened a third hub in Charlotte, North Carolina (joining other offices in San Fransisco, California and Draper, Utah).
Speaking to what the new funding means for the company, Varo Bank founder and CEO Colin Walsh said in a statement, “The time is now to bring the best of FinTech to the regulated financial system and build an entirely new kind of bank: one where consumers no longer have to choose between a sophisticated digital experience and a trustworthy banking partner. This funding accelerates our path to achieving a profitable, transformative, and sustainable business designed to advance financial inclusion for millions of consumers.”
Meanwhile, David Craver of Lone Pine Capital said of the firm’s investment, “We are thrilled to support Varo’s vision of the future of banking—one that is built on trust and innovation—and scales to millions of consumers. What the Varo team has been able to achieve in such a short time in the market is truly remarkable. This is a group of trailblazers who are well on their way to building one of America’s next generation of iconic companies.”
With neobanks proving to be an attractive investment in recent months, it only makes sense that Varo would see such interest in its Series E. Of course, Varo has a distinct advantage over its FinTech brethren now that it’s a nationally license bank of its own, meaning that it doesn’t need to worry about partnering with existing banks as most startup banking apps do. Thus, with the wind in its sails and more money in its coffers, it’s safe to assume that Varo Bank will continue to grow into a FinTech giant.