N26, the German challenger bank, raised $170 million in venture funding, extending its Series D round to $470 million.
With it, the fintech now has a valuation of $3.5 billion. It is Germany’s highest-valued startup and among the ten most valuable financial technology companies worldwide.
All of the investors who took part in N26’s Series D round in January in which it raised $300 million at a valuation of $2.7 billion, invested in the extension. They include Insight Venture Partners, GIC, Singapore’s sovereign wealth fund, Tencent, Allianz X, Peter Thiel’s Valar Ventures, Earlybird Venture Capital, and Greyhound Capital. To date, N26 has raised more than $670 million.
N26 is among a crop of fintech companies that are disrupting the banking space, betting consumers want a mobile-only banking service with little in the way of fees. The company has been a huge success in Europe where it has 3.5 million customers. It recently opened up for business in the U.S. and has plans to launch in Brazil next.
N26’s ability to raise even more funding is a testament to its growth and is indicative of the appetite among venture capitalists to invest in mobile-only banking startups.
“N26 is one of the few tech companies that bring digital innovation from Europe to the US. We see customers all around the world waiting for banking to change and are thankful to support N26 on that journey to transform retail banking globally,” Andrew McCormack
Partner at Valar Ventures said in a press release when N26 announced the extra funding.
N26 isn’t the only challenger bank getting attention from VCs. Last month Monzo, the UK digital bank that counts more than two million consumers as customers, launched in the U.S., rolling out its debit card and mobile app to users during in-person events. Monzo splashed on the scene in the UK back in 2015. Today it has about 850 employees and a valuation of more than £1 billion. Dave, the mobile banking and personal finance app recently raised $110 million in debt led by Victory Park Capital. It’s in talks with investors about raising more capital at a valuation of close to $1 billion. While the mobile-only banks are garnering a lot of attention and customers they aren’t profitable yet. Venture capitalists don’t seem to mind as long as these fintech companies continue to experience red hot growth.
N26 plans to use the additional funding to expand further in Europe, the U.S., and Brazil. It's also spending the money to invest in new features for its mobile banking app. One example is Shared Spaces, which enables customers to create sub-accounts within the app and share it with as many as ten people. It also plans to expand its workforce. In the last twelve months, it has tripled its headcount to more than 1,300.
“Once again, our investors have placed their trust in us. This will allow us to accelerate our global expansion outside Europe. The further increase in valuation is a great testament to the company’s development over the last months,” said N26 co-founder Maximilian Tayenthal in the press announcement.