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US neobank Chime is in talks to raise a new round of funding that could give it a valuation of $12 billion to $15 billion, according to two sources familiar with the matter.
Even the low end of that range would more than double Chime’s last private valuation of $5.8 billion in December 2019, and make it the most valuable challenger bank worldwide, ahead of Brazil’s Nubank.
Chime is looking to raise at least $500 million in the round, one of the sources said.
A spokesperson for Chime declined to comment.
Chime, founded in 2013, has more than 8 million customers and has seen major growth throughout the coronavirus pandemic.
The so-called challenger bank raised a $500 million round led by Twitter and Revolut backer DST Global in December 2019, but has seen rapid growth in 2020. A deal could be closed imminently as part of a syndicate of new and existing investors, said one of the sources, who has direct knowledge of the process.
Read more: CEOs at Stash and Chime say they’re seeing record signups as fintechs race to set up ways for customers to get stimulus checks quickly
Late-stage investors have taken a greater interest in the financial services space in general following the rapid growth of stock trading app Robinhood, another source said. Robinhood raised $200 million in August at a $11.6 billion valuation, up from an $8.6 billion valuation which it achieved just a month before.
Chime’s growth has exploded in the wake of the coronavirus
Chime was in the news throughout the coronavirus pandemic after it announced plans to hand a $200 advance to customers as part of an extension to its popular SpotMe feature. That’s after the government announced the CARES Act, a $2 trillion package to provide aid to businesses and individuals.
When stimulus money was distributed, of which an estimated 93% of Americans were eligible for, Chime managed to get it into the hands of many of its customers before most of the big banks. Chime had already distributed more than $1 billion in stimulus payments to over 600,000 customers two days before many of the banks were able to distribute the funds.
See more: Digital-only banks like Chime are seeing record signups amid the coronavirus pandemic. Here’s how they drive revenue without lending or charging overdraft fees.
A Chime spokesperson told Business Insider in April that the bank saw the highest number of account openings in its seven-year history.
Chime initially made waves by offering its customers a fee-less checking account, a rarity among traditional US banks. The biggest US banks each make around $1 billion a year in fee-related revenues, something that Chime is seeking to disrupt. PNC Bank, the US’s ninth-largest bank, made a whopping $1.7 billion in fee revenue last year alone.
The startup has attracted funding from major VCs including Dragoneer, Menlo Ventures and Cathay Innovation.
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Source:: Business Insider