US challenger Varo Bank reportedly raising funds at reduced valuation
US challenger Varo Bank is reportedly raising $50 million at a $1.8 billion valuation, a 28% decline in value since its last fundraise.
The firm was valued at $2.5 billion in September 2021 after raising $510 million in a Series E funding round led by Lone Pine Capital.
The latest figures are revealed in a term sheet for the deal, seen by Fintech Business Weekly, signed in late January.
According to the term sheet, private equity firm Warburg Pincus has committed to contribute $25 million of the $50 million funding. Warburg Pincus is also set to receive $3.125 million worth of shares in connection with the deal, Fintech Business Weekly reports.
Launched in 2017, Varo’s digital banking platform offers current accounts with no monthly fees, savings accounts, and wealth management features aimed at advancing financial inclusion.
The firm became the first consumer fintech to be granted a national bank charter by the Office of the Comptroller of the Currency (OCC) in summer 2020, allowing the company to offer a full range of services backed by the Federal Deposit Insurance Corporation (FDIC).
In July, the bank laid off 75 members of staff as it looked to restructure in the pursuit of profitability. Varo reported net losses totalling $236.5 million last year.