Varo Raises $241 Million in Funding Ahead of Bank Charter Approval
Once again, despite the challenges the current pandemic has brought upon the U.S., FinTech firms are still closing major deals. Last week Varo announced that it had just concluded a $241 million funding round. The impressive Series D was co-led Gallatin Point Capital and returning investor The Rise Fund. Other participants include HarbourVest Partners and Progressive Insurance.
This major funding round comes at a pivotal time for Varo as the company stands on the verge of becoming the first FinTech to be awarded its own bank charter. The Federal Deposit Insurance Corporation (FDIC) signed off of Varo’s plan in February while the Office of the Comptroller of the Currency (OCC) previously granted preliminary approval in 2018. Final approval is expected to arrive this summer and, once their charter is obtained, the company says it plans to expand into credit cards and loans, as well as introduce new savings products to their current line-up.
It’s also worth noting that Varo’s $241 million Series D more than doubles the $100 million Series C the company raised less than one year ago — which itself more than doubled the $45 million Series B they raised in 2018. Interestingly it also falls just short of the $280 million Series F that the investment platform Robinhood announced last month. Other recently revealed rounds include Stash (another investment app) raising $112 million in April and text message-based financial guidance service Stackin’ closing a $12.6 million Series B earlier this month.
Reflecting on the company’s mission and what’s on the horizon, Varo’s founder and CEO Colin Walsh said, “Varo was founded first and foremost to make a powerful impact on systemic financial inequality in communities across this country. As the first fully digital national bank, Varo will bring our mission of financial inclusion to life and create more financially resilient – and thus healthier and stronger – communities.” Regarding the new round of funding, he added, “This new investment will enable us to complete the chartering process and leverage our modern banking technology to build on our track record of innovation and inclusion.” Meanwhile Andrew Quigg, Progressive’s Chief Strategy Officer, said of the company’s investment, “We’re excited for the opportunity to invest in Varo and look forward to exploring a commercial relationship. We understand consumers’ needs continue to evolve and Varo provides a convenient, cost-effective way for all consumers to bank.”
If it weren’t already clear that Varo’s impending bank charter was a big deal, this massive funding round should help drive home that point. While it’s unclear exactly when the FinTech will obtain that final seal of approval, once they do, it seems they’ll be ready to act on their plans with lightning speed. Therefore, expect to hear a lot more news from Varo throughout 2020 and beyond.