Varo Bank annonced Thursday a $510 million Series E funding round at a valuation of $2.5 billion led by Lone Pine Capital.
Named number seven on the Inc 5000 list for 23,935 per cent growth over the past three years and the first fintech bank to receive a charter from the OCC, Varo serves over four million no-cost bank accounts.
“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,” CEO and Founder Colin Walsh said in a press release.
“This funding accelerates our path to achieving a profitable, transformative, and sustainable business designed to advance financial inclusion for millions of consumers.”
In the last 13 months since obtaining its bank charter, Varo Bank doubled its opened accounts to four million.
In addition, the company has tripled its revenue and added new products like the Varo Advance personal credit advance announced in October last year. The product lets users get small amounts of credit, starting from a feeless $20.
The firm also added Varo Perks for cashback rewards, and plans to launch a credit building card dubbed Varo Believe.
Varo Bank is also expanding its workforce to a third hub in Charlotte, North Carolina, while also adding staff to the San Francisco Headquarters.
There is a reason why the neobank sits at the seventh fastest-growing private company in America according to Inc.
Meet the Neobank Investors
Lone Pine Capital was flanked by dozens of new investors including Declaration Partners, Eldridge, Marshall Wace, Berkshire Partners / Stockbridge, and funds and accounts managed by BlackRock, the firm said.
Past investors in Varo Bank also participated, including Warburg Pincus, The Rise Fund, Gallatin Point Capital, and HarbourVest Partners.
Financial Technology Partners LP and FTP Securities LLC (FT Partners) served as the exclusive financial and strategic advisor to Varo in this transaction.
“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,” Managing Director Lone Pine Capital, David Craver said.
“What the Varo team has been able to achieve in such a short time in the market is remarkable, and we look forward to seeing what the future has in store.”
From its launch in 2017, Varo Bank has offered premium bank accounts with no minimum balance requirement, monthly account, or overdraft fees, with high-interest savings accounts designed to help customers effortlessly manage their money and build savings.
“Partnering with Varo to directly address systemic barriers faced by underserved communities has proven to be an important and unique effort,” Varo Bank investor and advisor, Russell Westbrook said.
“Colin and his team continue to educate users about financial literacy to match the needs of the next generation of bank users regardless of their socioeconomic backgrounds.”
Over the past year, the company was recognized by Forbes on multiple occasions, including being named to their prestigious Fintech 50, Best Banks, and Best Startup Employers lists.
Fast Company honored Varo Bank’s innovation and impact, bestowing both its World-Changing Ideas and Most Innovative Companies awards.
