Venture capitalists e other investors have invested capital in fintech startups around the world in recent years, including a record number of rounds worth $ 100 million or more in the second quarter of 2020. In the second quarter of 2020 venture-backed fintechs startups raised 28 nine-figure rounds, underscoring the scale of the bet investors are making on fintech's long-term success.
The exchange explores startups, markets and money. You can read it every morning on Extra Crunch or receive The Exchange's newsletter every Saturday.Within that fintech wave are various centers of activity, including payments technology, investments, and banking. The latter category has helped to give rise to so-called neobanks, startup banking entities that offer consumer-oriented and mobile-oriented banking tools and services. Given the antiquated nature of banking in many countries (and how much the banking sector remains out of reach for many), neo-banks have seen a strong popularity among users in recent years.
And the startup cohort has raised oceans of capital to help fuel its growth. In America, Chime was recently valued at $ 5.8 billion after raising hundreds of millions at the end of 2019. More recently, neobank Revolut added $ 80 million to its $ 500 million worth of Q1 2020 round. Revolut is also worth north of $ 5 billion. Monzo is well funded (albeit with a recent valuation cut), Latin American-focused NuBank is worth $ 10 billion, according to Crunchbase, Starling recently raised another £ 40 million, while Germany's N26 is worth over $ 3 billion after its last nine- round figure.
From a fundraising standpoint, then, the neobanks are killing the game. And thanks to the recent favorable winds from the COVID-19 pandemic that have boosted interest in savings-related products, many of the same entities could enjoy a strong year so far. But the recent self-reporting of the 2019 era results from some Neobanks reports ample red ink, perhaps more than we could have predicted.
Of course, startups don't raise money for fun; they collect it to invest in their operations and lead the ladder. So, we knew these mega-funds were losing money on purpose. However, let's take a look at the economics of several neo-banks, like theirs now dated and therefore not at all current The results can provide useful context on two points: why investors are excited to put their capital into neobanks and why neobanks always seem to have another check to announce.
Monzo, Starling and Revolut
To prevent him from receiving unhappy emails from irritated fans of these companies, please note that we are looking back several quarters when we look at the following results.
It would be nice to have more recent data, but with European neobanks reporting their - roughly - 2019 results in recent weeks, that's what we have. We will analyze the numbers, but we will not confuse past performance with current results. We don't know much about the financial performance of neobank 2020.
Anyhoo, to the numbers. You can read the complete documents of Monzo here, Starling here (or here, if that link is in trouble) and Revolut here.
Let's start with Monzo, who has a clear set of figures to peek at:
