Mobile banking startup Varo Money has raised an additional $241 million in Series D funding, the company announced today. The investment was co-led by new investor Gallatin Point Capital and existing investor The Rise Fund, co-founded by TPG. Also participating in the round were Bono (yes, that one), along with entrepreneur, impact investor and movie producer Jeff Skoll; plus HarbourVest Partners and Progressive Insurance.

To date, Varo has raised $419.4 million in funding.

Launched in July 2017, Varo is now one of several digital banking apps that are taking on traditional banks. Its rivals include startups like Chime, Current, Space, Cleo, N26, Empower Finance, Level, Step, Moven and many more.

Similar to others in this space, Varo promises an easily accessible bank account with no monthly fees or minimum balance, plus high-interest savings, and a modern mobile app experience. Though it doesn’t have any brick-and-mortar branches, customers can access their money through a network of more than 55,000 fee-free Allpoint ATMs worldwide.

During the COVID-19 crisis, Varo served its customer base by providing early access to stimulus and unemployment relief funds, as it already does with users’ direct deposit paychecks. It also increased its deposit and ATM limits, and partnered with job platforms Steady and Wonolo to help connect its customers to new work opportunities.

Like most of its competitors, Varo itself is not a bank — its accounts to date have been provided by The Bancorp Bank, member FDIC.

That may soon change, the company says.

In September 2018, Varo received preliminary approval from the Office of the Comptroller of the Currency (OCC). In February 2020, Varo announced it was the first banking startup to win approval for FDIC insurance. Last month, the company said it was moving to the final stage of its bank charter journey.

“Varo was founded first and foremost to make a powerful impact on systemic financial inequality in communities across this country,” said Colin Walsh, founder and CEO of Varo, in a statement. “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,” he added.

Pending completion of the conditions required by the OCC, the FDIC and the Federal Reserve, Varo will receive approval to become a national bank.

The company expects this process to complete by summer 2020, at which point it will expand its lineup of services to include credit cards, loans and additional savings products.

Those expansions will help to further differentiate its mobile banking app from a number of competitors, as a large group today remain largely focused on offering checking and savings accounts, not a fuller range of financial products.

Varo is not the only fintech startup that’s moving toward becoming a real bank. In March, Square said it had also received approval from the FDIC to conduct deposit insurance. It aims to launch Square Financial Services, offering small business loans, in 2021.

These moves by fintech startups come at a time when the younger generation is ditching legacy banking in favor of tech. Millennials in particular don’t trust big banks, preferring instead the fee-free challenger banks offering modern mobile features they’ve come to expect from all their other apps.

“In the midst of all the economic challenges people are facing right now, the digital economy can still be a force for good. Varo’s focus on financial inclusion and the support they offer people to help manage their finances and reduce financial stress really matters at a time when so many American families are struggling in a volatile economy. And that’s why RISE chose to partner with the team at Varo,” said Maya Chorengel, co-managing partner of The Rise Fund.

In addition to its expansion into new products, Varo will hire across operations, marketing, risk, engineering and communications following the round’s close. It has recently added headcount to its customer care teams.

Varo today counts nearly 2 million banking and savings accounts and is growing rapidly. Since the beginning of 2020, account growth is up 60%, spend is up roughly 1.5x over the same period and deposits are up by roughly 3.5x.

Source: Tech Crunch Startups | Challenger bank Varo, soon to become a real bank, raises 1M Series D

Monzo, the U.K. challenger bank, continues to be faced with tough decisions linked to the coronavirus crisis and resulting economic downturn.

Following the shuttering of its Las Vegas-based customer support office and almost 300 staff being furloughed in U.K., the company has announced internally that up to 120 U.K. staff are being made redundant. Reuters first reported the news just moments ago — which I have now confirmed based on my own sources.

According to an internal memo written by new CEO TS Anil, following an all-hands earlier this afternoon led by Anil and Monzo co-founder and president Tom Blomfield, the bank is to make up to 120 roles redundant, despite previously stating that furloughs and pay cuts already carried out would mean further layoffs could be avoided. That no longer appears to be the case, with Anil explaining that the current economic situation isn’t expected to revert back to normal quickly.

I understand a full consultation period for those employees potentially affected will now take place, as is stipulated under U.K. employment law. In addition, Anil told staff that in order to recognise their contribution, the bank will be waiving the one year “cliff” from their vesting schedule so that they won’t lose out on any shares due to them.

The announced layoffs add to a turbulent time for Monzo in recent months, as it, along with many other fintech companies, has attempted to insulate itself from the coronavirus crisis and resulting economic downturn.

In April, I reported that Monzo was shuttering its customer support office in Las Vegas, seeing 165 customer support staff in the U.S. lose their jobs. And just a few weeks earlier, we reported that the bank was furloughing up to 295 staff under the U.K.’s Coronavirus Job Retention Scheme. In addition, the senior management team and the board has volunteered to take a 25% cut in salary, and co-founder and CEO Tom Blomfield has decided not to take a salary for the next 12 months.

Like other banks and fintechs, the coronavirus crisis has resulted in Monzo seeing customer card spend reduce at home and (of course) abroad, meaning it is generating significantly less revenue from interchange fees. The bank has also postponed the launch of premium paid-for consumer accounts, one of only a handful of known planned revenue streams, alongside lending, of course.

And just last week, it was reported that Monzo is closing in on £70-80 million in top-up funding, to help extend its coronavirus crisis runaway. However, as new and some existing investors play hardball, the company has reportedly had to accept a 40% reduction in its previously £2 billion valuation as part of its last funding round last June, with a new valuation of £1.25 billion.

Source: Tech Crunch Startups | Monzo to lay off up to 120 employees as the ‘economic situation’ remains challenging

Imagine going from zero followers to 10,000,000+ followers in less than five months. I have watched somebody do exactly that.

My brother Topper Guild is already reaping the benefits of fame: People stop him in the street for photos and he’s been offered thousands of dollars to promote brands and befriend celebrities.

In less than 150 days, he went from being a high school sophomore to earning more than a Harvard MBA and working with his idols like boxer Ryan Garcia. In time, he also leveraged his following to score more than 100,000,000 views for direct-to-consumer brands like FashionNova and NUGGS.

How did he do it? And how would he advise you?

Consumer startups can apply these same strategies, tactics and ideas to grow quickly on TikTok, which is not nearly as saturated as Instagram and offers faster growth rates.

Let’s dive right into the principles he used to grow (that you can use too).

Do what works

Source: Tech Crunch Startups | How to attract more than 10 million TikTok followers in 5 months