US-based mobile bank Varo Money completed a $241m series D round yesterday that included automotive insurance provider Progressive.
Investment firm Gallatin Point Capital co-led the round with private equity group TPG’s The Rise Fund, while private equity firm HarbourVest Partners also participated. JP Morgan was placement agent.
Varo operates a digital bank that offers bank and savings accounts with no overdraft, transfer or foreign transaction fees, through a partnership with financial services firm Bancorp.
The company has applied for a national bank charter and expects in the coming weeks to become the first digital bank in the US to receive such a charter, at which point it will begin introducing credit cards and loans in addition to more savings products.
The round brought the company’s overall funding to more than $419m since it was founded in 2015. The cash will be channelled into product innovation.
Private equity firm Warburg Pincus led a 2016 funding round for Varo sized at more than $27m. It returned to co-lead a $45m series B round with The Rise Fund in January 2018 that increased the company’s total funding to $78m.
Gopher Asset Management joined Warburg Pincus and The Rise Fund in a $100m series C round in July 2019. Other existing Varo investors include law firm Manatt, Phelps & Phillips’ venture capital fund, Manatt Venture Fund, as well as Silicon Valley Bank and Gaingels.
Colin Walsh, Varo’s founder and chief executive, said: “As the first fully digital bank, Varo will bring our mission of financial inclusion to life and create more financially resilient – and thus healthier and stronger – communities.
“This new investment will enable us to complete the chartering process and leverage our modern banking technology to build on our track record of innovation and inclusion.”
