Chris Britt, CEO of Chime
The fintech world has a new heavyweight.
Chime, the start-up that offers banking services over cell phones, has completed a fundraiser that valued the company at $ 14.5 billion, CNBC has learned exclusively.
This high number makes Chime the most valuable American fintech start-up for private customers. Robinhood, the popular free trade app, raised $ 11.2 billion in cash last month. The moves show that even if investors penalize the stocks of established U.S. banks – the KBW Bank Index has lost a third of its value this year – they are willing to spend money on pre-IPO fintech companies that are increasingly like segment winners appearance.
In this final round, a Series F that grossed $ 485 million, Chime more than doubled its valuation from December and is worth nearly 900% more than it was 18 months ago when it had a valuation of $ 1.5 billion. Dollar reached. Chime is ranked 25th on CNBC Disruptor 50 2020 list.
By developing, Chime is part of a group of publicly traded and privately held technology companies that saw strong growth during the coronavirus pandemic. According to CEO Chris Britt, Chime, the largest of a new generation of start-ups known as Challenger Banks, has more than tripled its transaction volume and revenue this year.
"Nobody wants to go to bank branches anymore, nobody wants to touch cash anymore, and people are always more comfortable living their lives on their phones," said Britt. "We have a website, but people don't really use it. We're a mobile app, and that's how we deliver our services."
Britt said the company became profitable on an EBITDA basis during the pandemic. Chime adds hundreds of thousands of accounts every month, he said, but declined to say how many users it has in total.
Chime will be "IPO-eligible" for the next 12 months, Britt said, although it is not tied to an IPO during that period.
Pre-IPO companies are increasingly attracting the attention of big investors looking to stay away from frothy public markets, and JPMorgan Chase recently set up a trading team for stocks from giants like Robinhood, Airbnb and SpaceX.
The company's investors are mirroring this stage in Chime's development and are now including hedge funds that have stakes in both private and public companies, Britt said. Investment firms that participated in the last round include Coatue, Iconiq, Tiger Global, Whale Rock Capital, General Atlantic, Access Technology Ventures, Dragoneer and DST Global.
"A lot of these people are a combination of late-stage private and public investors," said Britt. "People who invest in public markets and make compelling bets on your business are a great signal to future investors that these savvy folks with great track records are investors in the business."
Chime Visa credit card
Chime was co-founded by Britt in 2013 and offers customers free mobile banking accounts and debit cards, as well as access to ATMs. It has grown by focusing on a segment of Americans who make between $ 30,000 and $ 75,000 a year. Unlike regular banks that make money from loans and fines like overdraft fees, Chime mostly makes money when customers swipe their debit or credit cards.
"We're more of a consumer software company than a bank," said Britt. "It's more of a transactional, processing-based business model that is very predictable, very repetitive, and very profitable."
After the final fundraiser finishes, Chime will have nearly $ 1 billion in cash, according to someone with knowledge of the situation. That gives him plenty of dry powder to fuel growth and potentially buy businesses, though Britt said it currently has no interest in acquiring an FDIC-backed institution. Instead, Chime works with lenders like Bancorp and Stride Bank.
There has been talk of fundraising for the San Francisco-based company for the past few weeks. Business Insider reported that Chime was in talks to raise funds of between $ 12 billion and $ 15 billion, quoting people with knowledge of the negotiations.
This attention, according to Britt, has generated interest from blank check companies or acquisition vehicles for special purposes.
"I probably get calls from two SPACS a week to see if we're interested in getting to market quickly," he said. "The reality is that we have a number of initiatives that we want to complete over the next 12 months to enable us to be ready for the market."