Varo Bank, a US-based digital bank that counts automotive insurance provider Progressive as a backer, raised $510m yesterday in a round led by investment manager Lone Pine Capital.
Declaration Partners, Eldridge, Marshall Wace, Berkshire Partners’ Stockbridge unit and funds and accounts managed by BlackRock took part in the round, as did Gallatin Point Capital, HarbourVest Partners, TPG’s The Rise Fund and Warburg Pincus. It valued the company at $2.5bn, according to Reuters.
Founded in 2015, Varo provides digital banking services without a minimum balance requirement or the overdraft fees associated with traditional banks. It also offers additional banking products including automatic saving schemes and short-term loans of up to $100m.
Colin Walsh, founder and chief executive of Varo Bank, said: “This funding accelerates our path to achieving a profitable, transformative and sustainable business designed to advance financial inclusion for millions of consumers.”
Russell Westbrook Enterprises had led a $63m round for the company in February this year, investing alongside The Rise Fund, Gallatin Point Capital, Warburg Pincus and vehicles connected to BlackRock.
Progressive took part in Varo’s $241m series D round eight months earlier. It was co-led by Gallatin Point Capital and The Rise Fund and also backed by HarbourVest Partners.
Gopher Asset Management, Warburg Pincus and The Rise Fund had all participated in a $100m series C round for the company in mid-2019, after the last two had co-led a $45m series B round the previous year.
Warburg Pincus had provided $27m in funding for the company in 2016. Its shareholders also include law firm Manatt, Phelps & Phillips’ Manatt Venture Fund, Silicon Valley Bank and Gaingels.
