The bank extended its Series D round of March 2021.

Starling, the U.K.-based digital bank, announced today its raise of £50 million ($69 million) from Goldman Sachs’ growth equity investment arm. The funding came as an extension of the £272 million Series D round announced in March 2021, taking its total fundraising to £322 million. (CNBC)

The round had valued the bank at £1.1 billion.

Profitable neobank

Starling has charted a course of rapid growth – its deposits have surged to more than £6 billion from £1 billion just over a year ago.

The digital bank now caters to more than two million current accounts, including 350,000 business accounts. Its share of the U.K.’s SME banking market is now 6%, and the bank claims it is the fastest-growing bank serving SMEs.

Significantly, Starling is already on a profitable trajectory and is on course to report its first full year of profit by the end of its next financial year.

The FT said earlier this month that the pandemic forced the U.K. challenger banks such as Starling, Monzo and Revolut to cut costs, focus on new revenue streams, and improving their product. As a result, they are on a path towards profitability.

Starling – Goldman

Anne Boden, founder and CEO of Starling Bank, said: “Securing the support of another global financial heavyweight demonstrates the strength of demand from investors and represents yet another vote of confidence in Starling. Goldman Sachs will bring valuable insight as we continue with the expansion of lending in the UK, as well as our European expansion and anticipated M&A.”

James Hayward, managing director at Goldman Sachs (NYSE: GS), said: “Starling is one of the leading and most innovative digital banks in the UK, with an ambitious technology-first leadership team and addressing a deep market opportunity. We are delighted to be supporting their growth with this investment and believe the company has sustainable long-term earnings potential.”

Use of funds

Starling said it will use the funding to support its growth ambitions including expansion into Europe. It may also consider a strategic acquisition.

Related Story:    Starling Bank Raises £272 Million Series D Funding At £1.1 Billion Pre-Money