UK: Digital bank Starling raises a $376 million investment round
Starling has raised $376 million in an investment round led by Fidelity, valuing it at $1.5 billion.
Starling Bank said earlier this week that it has raised in funding $376 million in an investment round led by Fidelity Investments. The digital-only challenger bank in the UK, with the new funding, is now valued at $1.5 billion, lifting it into the ranks of unicorns - privately-held firms valued at $1 billion or more.
Other investors that participated in the round include Qatar's sovereign wealth fund, the Qatar Investment Authority, U.K. pension scheme Railpen, and hedge fund Millennium Management.
Anne Boden, Starling's CEO, in a statement on Monday said: “Digital banking has reached a tipping point. Customers now expect a fairer, smarter and more human alternative to the banks of the past and that is what we are giving them at Starling as we continue to grow and add new products and services.”
Boden added: “Our new investors will bring a wealth of experience as we enter the next stage of growth, while the continued support of our existing backers represents a huge vote of confidence.”
According to Starling, the freshly injected cash would be used to expand into Europe and for anticipated mergers and acquisitions. Last year, the company restarted talks to secure a banking license in Ireland, after having initially put international expansion plans on hold due to the coronavirus pandemic.
Also, Boden has previously expressed interest in buying a rival lender. She said in an interview last year that Starling is probably going to acquire something during 2021. In her words, “Lots of lenders are going to reevaluate their future and we are growing very, very fast. We’re always looking for opportunities.”
Boden denied a report claiming that JPMorgan and Barclays had shown an interest in buying Starling. She has previously indicated the start-up would seek an initial public offering.
Starling was founded in 2014 by Boden, a former banking executive, and is one of Europe’s most prominent digital banks. The firm has attracted 2 million users and now accounts for 5% of the U.K.’s small business banking market, with 300,000 small business clients.
The fintech company has reached profitability, something many fintechs struggle with. The company eked out a profit of £800,000 in October and says it’s been consistently profitable since, with net income now exceeding £1.5 million per month. The company says it’s now on course to report its first full year of profit.
Starling got a big boost from the U.K.’s coronavirus lending schemes, becoming one of several fintech firms to offer government-backed loans to businesses during the pandemic. It now has gross lending of more than £2 billion and deposits of £5.4 billion.
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