Just over a year after Varo Bank was granted a bank charter, the mobile banking startup announced Thursday it had raised $510 million in an oversubscribed funding round led by Lone Pine Capital.
The massive Series E included dozens of new additional investors including Declaration Partners, Eldridge, Marshall Wace, Berkshire Partners / Stockbridge, and funds and accounts managed by BlackRock. Existing investors also took part in the half billion dollar round and included Warburg Pincus, The Rise Fund, Gallatin Point Capital, and HarbourVest Partners.
The fresh funding will be used to build out new products and technology for the startup to deploy as well as catering to and growing the four million accounts opened since its inception in 2017.
Varo banking services are targeted at younger consumers, though its been implemented by all age groups comfortable enough with doing all their banking online negating access to physical branches, . The company competes with a number of mobile banking startups like Chime, Current and Space.
Like its rivals Varo Banks offers bank accounts that lean on accessibility with no monthly fees or minimum balance. Despite a an obvious lack of brick-and-mortar branches, Varo offers its users access to their money through a network of more than 55,000 fee-free Allpoint ATMs worldwide.
Throughout the COVID-19 pandemic, Varo offered its customer base early access to stimulus and unemployment relief funds similar to its offerings with users’ direct deposit paychecks. It also beefed up its deposit and ATM limits, and partnered with job platforms Steady and Wonolo to connect its customers with new career opportunities.
The banking startup garnered fresh attention, however, in August of 2020 when the company announced it was granted a national bank charter from the Office of the Comptroller of the Currency (OCC) and secured regulatory approvals from the FDIC and Federal Reserve to open the now Varo Bank, N.A. This arrived just two months after its $241 million Series D.
With it’s new charter, Varo said it planned to offer more access to loans, credit cards and savings products. And it seems to have held up its word. Varo Bank began offering Varo Advanced – a cash advance option that allows qualifying customers to secure a cash advance of up to $100 within the Varo Bank app. The startup also detailed its upcoming Varo Believe credit card aimed at building and repairing credit with a security deposit and sans fees.
“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.”