Varo, an American neobank with the charter of the national bank, reported a capital raising of $50 million at a discount of 28% compared to its last estimate.
The last time Varo Bank was evaluated was in September 2021. At that time, the financial institution was valued at $2.5 billion. Shortly before that, the bank raised investment funds in the amount of 510 million dollars following the results of the Series E financing round.
Warburg Pincus led the new capital raising at a much lower valuation of $1.5 billion.
Varo Bank was founded in 2015 by Colin Walsh, a former Wells Fargo executive. This brand became the first American consumer fintech firm to receive a license from the national bank. This license gave digital challenger the opportunity to offer a full range of services insured by the FDIC.
In July, the bank announced the dismissal of 75 employees. This decision was made in order to reduce costs. The measure was forced because at that time the quarterly expenses of the financial institution amounted to $ 80 million, which was much higher than the revenue figure.
In an address to employees, the bank’s CEO Colin Walsh said that the cuts, which amounted to about 10% of the workforce, were necessary to make sure that the financial institution has enough capital to implement a development strategy and achieve acceptable profitability indicators.
At the end of last year, Varo Bank recorded net losses, the amount of which amounted to $ 236.5 million.
Varo Bank is the newest digital bank that has received a multibillion-dollar valuation and attracted millions of new customers who are not satisfied with the service of traditional institutions. Unlike larger competitors such as Chime, which partners with FDIC-backed banks to process deposits, this financial institution is fully regulated.
As we have reported earlier, B2B Payments Platform Barte Raises $3 Million.