Varo® Bank Raises $510M of Growth Capital
Varo Bank, N.A., the first all-digital, nationally chartered bank in the US, today announced it closed a $510 million oversubscribed funding round. The round was led by new investor FTP Securities LLC (FT Partners), who was joined by dozens of additional new investors including Declaration Partners, Eldridge, Marshall Wace, Berkshire Partners / Stockbridge, and funds and accounts managed by BlackRock. These new investors add to a distinguished group of existing investors who have also participated in the round 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.
“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,” said Colin Walsh, CEO and founder of Varo Bank, N.A. “This funding accelerates our path to achieving a profitable, transformative, and sustainable business designed to advance financial inclusion for millions of consumers.”
The investment will be used to further accelerate Varo’s rapid customer growth and support additional investment in product and technology innovation. In the last 13 months since obtaining its bank charter, Varo doubled its opened accounts to four million. In addition, the company has tripled its revenue, unlocked new cost efficiencies, 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. Employee count has nearly doubled, with Varo expanding into a third hub in Charlotte, North Carolina.
“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,” said David Craver of Lone Pine Capital. “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.”
From its launch in 2017, Varo has offered premium bank accounts with no minimum balance requirement, monthly account, or overdraft fees, as well as high-interest savings accounts designed to help customers effortlessly manage their money and build savings. Empowered by its charter, Varo’s offerings have grown to include a full suite of bank products aimed at advancing financial inclusion and breaking down systemic barriers to wealth creation. Varo Advance is an innovative cash advance that allows qualifying customers to secure a cash advance of up to $100 right in the Varo Bank app within seconds. The upcoming Varo Believe credit building credit card is designed to help Varo customers safely build or repair their credit, with a flexible security deposit and without fees.
“Partnering with Varo to directly address systemic barriers faced by underserved communities has proven to be an important and unique effort,” said NBA MVP and Varo investor and advisor, Russell Westbrook. “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.”
Varo’s efforts to build a better kind of bank have been recognized with some of the most prominent accolades across the financial services and technology industries. Last month, Varo’s record revenue growth propelled it to a top spot on the Inc. 5000 list of fastest growing private companies in the US. 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. Varo also led the recent Inc. 5000 California list as one of the top five highest-growth companies in the state and was named Celent’s Model Bank of the Year.
CNBC learned that “Varo’s valuation rose to $2.5 billion from approximately $700 million after its previous fundraising, according to people with knowledge of the matter.”
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