This week, Chime, a company founded by Chris Britt that delivers banking services through mobile phones, earned itself the title of most valuable American fintech start-up serving retail consumers. This comes after another mega funding round for the fintech that demonstrates the investor shift towards startup payment services, as interest in traditional banking declines.
The Series F Funding Round raised $485 million, valuing Chime at a hefty $14.5 billion. This doubles the company’s valuation of $5.8 billion from December. Chime was valued at $1.5 billion only 18 months ago, marking an astronomical jump in a quick span of time. The round was reportedly funded by Tiger, ICONIQ, General Atlantic, Dragoneer, and DST Global, as well as some hedge-funds. Lesser known names that participated included Whale Rock Capital and Access Technology Ventures. Chime leaves the round with almost $1 billion in cash to fuel its growth and potentially pursue company acquisitions.
Founded in 2013, Chime is pitched as more of a SaaS company, considering itself “more like a consumer software” rather than a bank, according to Britt. “It’s more a transaction-based processing-based business model that is highly predictable, highly recurring and highly profitable.”
The service itself provides access to no-fee mobile banking accounts, debit cards, and ATMs whose growth is attributed to the company’s focus on Americans earning between $30,000 and $75,000 a year. Unlike traditional banks, Chime’s revenue model is based on monetizing swipes when customers use their debit or credit cards. With Chime, customers do not pay for fees on services like loans and overdrafts.
It is said that Chime’s deliberate measures to paint itself as a software company, rather than a fintech, won favor with investors who are tired of traditional banks. Britt reported that it reached the stage of being profitable on an EBITDA level amidst the COVID-19 pandemic.
On the uptick in usage Britt commented, “nobody wants to go into bank branches, nobody wants to touch cash anymore, and people are increasingly comfortable living their lives through their phones. 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 further shared that the app is adding approximately hundreds of thousands of accounts per month. The company also shared that its transaction and top-line have tripled over the year.
Interestingly, Britt stated his company will become “IPO-ready” within the next 12 months despite not being committed to going public within a year. Britt states that there are a number of initiatives to settle before the company is market ready.
