Varo Bank Raises $510 Million in a Series E Funding

Written By
G. Dautovic
September 20,2021

Varo Bank raised a shocking $510 million in a Series E funding led by Lone Pine Capital at a valuation of  $2.5 billion. Back in 2020, Varo became the first US neobank to get a national bank charter.

Only seven months before Varo’s participation in Series E funding, the bank collected $63 million in a financing round spearheaded by NBA superstar Russell Westbrook. Westbrook is also a member of the fintech startup, working as an associate on the bank’s programs that help various underprivileged communities in the United States. 

Varo Bank said that during the last 13 months, after getting a national bank charter, the institution managed to double the number of opened bank accounts. Today, Varo has over four million accounts, including checking and savings accounts. The bank didn’t reveal its revenue but noted that it was tripled since the national bank charter was acquired.

In June 2020, the bank raised $241 million in Series D Funding, with almost two million checking and savings accounts. In February this year, the number of opened accounts reached three million, and by now, the bank has over four million users.

Last year, Varo Financial became the first fintech bank to be granted the national bank charter from the Office of the Comptroller of the Currency (OCC) and Federal Reserve. The San Francisco-based startup became Varo Bank N.A. and started offering FDIC-insured services, becoming a “true” bank, albeit one that lacks physical branches.

Colin Walsh, Varo’s CEO and founder, said that getting a national bank charter was crucial for Varo: 

“Being in the regulated system loop has allowed us to expand our margins considerably.” [...] “We also now have direct access to the payment network, so our ability to generate substantial value both to our consumers as well as to our shareholders is becoming more and more apparent,” Walsh said. 

Varo is not yet a profitable bank, but according to Walsh’s opinion, it's going to become one in two or three years: 

“One of the nice things that the charter affords us is that we can actually pursue growth and profitability at the same time.” [...] “It’s very much within that three-year window of when we became a bank,” Walsh said. 

Varo was established in 2017 with the idea to be “an all-digital, mission-driven, FDIC-insured bank designed around the modern American consumer.” The bank is best known for offering bank accounts with no minimum balance requirements and high-yield savings accounts.  

About author

I have always thought of myself as a writer, but I began my career as a data operator with a large fintech firm. This position proved invaluable for learning how banks and other financial institutions operate. Daily correspondence with banking experts gave me insight into the systems and policies that power the economy. When I got the chance to translate my experience into words, I gladly joined the smart, enthusiastic Fortunly team.

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