BankTechM&A / Funding

Digital banking platform Oxygen raises $17 million

Oxygen serves both consumers and small businesses

Digital banking platform Oxygen has raised $17 million in a Series A funding round led by Runa Capital.

The funding round also had participation from some celebrity and prominent fintech investors. They included Frank Strauss, Global CEO of the private & commercial bank for Deutsche Bank AG, Plaid co-founder William Hockey, Ankur Nagpal, Peter Treadway, and NFL wide receiver Larry Fitzgerald. Russia’s S7V – the venture arm of S7 Airlines – along with 1984.vc, EFG Hermes, Rucker Park, and Inventures also participated in the financing. 

San Francisco-based Oxygen plans to use the funds to help accelerate growth and to scale its team, CEO Hussein Ahmed told FinLedger in an interview.

Oxygen, which launched in January 2020, provides flexible banking services to consumers and small businesses. This is a bit unusual as most challenger banks either serve consumers, or businesses – but not both.

The bank’s customers don’t have a minimum balance or monthly fees and are FDIC insured through a partnership with The Bancorp Bank. Oxygen Bank also provides a Visa debit card that has cashback rewards.

To date, the company has raised $24 million. Since Oxygen launched, the company has opened more than 125,000 accounts and has seen over a “969X” revenue increase since the start of the COVID-19 pandemic.

Although Ahmed said he couldn’t share the company’s valuation nor could he share the company’s revenue, he did say that the bank wasn’t profitable — yet.

“This space is capital intensive,” Ahmed told FinLedger. “[it’s] better [to] be well-capitalized than undercapitalized because you need reserve funds and you need to cover fraud losses.”

In the long-term, Ahmed said he wants the bank to expand globally.

“If you look at the long term vision of Oxygen, frankly, it has to be a global operation given our customer segment,” he said. “Because you can’t expect a designer, a marketer, or a social media manager to be bound to a certain city or a certain state.”

Temur Turdibekov, co-founder and partner of Russian VC firm S7V, said in an emailed statement that the small-to-medium business segment – especially microbusinesses – are a severely underserved market.

“When we saw what Oxygen had built and learned of their traction with this segment, it was an easy decision to invest,” he wrote. “They’re solving real problems.”

Other digital banks that have raised money in recent months include Jiko Group, which in later October announced it had raised $40 million in a Series A round of funding.

Upfront Ventures and Wafra Inc. co-led the financing, which also included participation from Radicle ImpactNYCA PartnersAnthem Ventures and all existing investors.

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