Venture Capital: Mobile-Based Banker Chime Raises $485 Million At $14.5B Valuation
The fintech’s Series F more than doubled its valuation from December.
Chime raised a monster $ 485 million in its Series F round, and its valuation has now leapfrogged past the $ 11.2 billion sticker garnered by fee-free trading app Robinhood.
According to CNBC, the coronavirus pandemic triggered moonshot growth for Chime.
It said, quoting the company’s CEO Chris Britt, that the mobile-banker more than tripled its transaction volume and revenue this year. Chime also became profitable (on an EBITDA basis) during the pandemic.
Chime: It’s all about mobile
Bank branches are out. So our turnkey websites. The way to bank these days is on your mobile phone.
“Nobody wants to go into bank branches, nobody wants to touch cash anymore, and people are increasingly comfortable living their lives through their phones,” Britt said to CNBC. “We have a website, but people don’t really use it. We’re a mobile app, and that’s how we deliver our services.”
Chime provides fee-free mobile banking accounts, debit cards, and access to ATMs. Unlike traditional banks, which make profits from fees, Chime makes its money from card swipes.
Speaking to CNBC, Britt sought to distance Chime even further from traditional bankers – which relied on a branch-based business model.
“We’re more like a consumer software company than a bank,” Britt said. “It’s more a transaction-based, processing-based business model that is highly predictable, highly recurring, and highly profitable.”
The difference couldn’t be starker if you juxtapositioned the fintech’s galloping valuations against the KBW Bank Index. The latter has plunged by a third this year.
According to Britt, Chime is adding hundreds of thousands of accounts a month.
IPO or Listing via SPAC?
Chime’s numbers naturally raise speculation about its IPO.
According to Britt, the fintech could be ready for an IPO within the coming year. Whether it will go for one in that time frame, however, is a moot point.
Nonetheless, investors, even hedge funds, who typically bet on reaping the gains from an investment in a start-up heading to an IPO, are already on board Chime.
Investors in Chime’s latest round included Coatue, Iconiq, Tiger Global, Whale Rock Capital, General Atlantic, Access Technology Ventures, Dragoneer, and DST Global.
“Having folks who invest in public markets making high-conviction bets in your company is a great signal to future investors,” said Britt.
SPACs, Wall Street’s latest craze, are also eyeing Chime. These companies offer a simple merger route to a stock exchange listing rather than the more cumbersome, and expensive, IPO.
According to Britt, he gets calls from two SPACs a week.
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