In the middle of the IPO week we need to add another name to our list of future debuts, namely Chime, which announced a huge new round of capital today. The $ 485 million F-Series values the consumer fintech giant at $ 14.5 billion, a huge figure given that Chime it was recently worth $ 5.8 billion after raising $ 700 million last December.
Even more stark is the company's $ 1.5 billion valuation set in early 2019. $ 1.5 billion to $ 14.5 billion in less than two years is a race for any startup. Powering the final round were a number of familiar names, including Tiger, ICONIQ and General Atlantic, along with Dragoneer and DST Global. Names I'm less familiar with like Whale Rock Capital and Access Technology Ventures also attended.
Hidden in a CNBC article that opened the story was the news that Chime is now profitable for EBITDA and could be "IPO-ready" in the eyes of its CEO in about a year.
ProWellTech contacted Chime for clarification on the EBITDA point, asking whether the figure is adjusted or not, as many EBTIDA metrics remove the cost of share-based compensation given to their employees. According to Chime, the metric is "true EBITDA", to which we award five extra points. In response to a question about growth, Chime said its "transaction and revenue" tripled from the same period last year.
The Chime round and news of its nascent non-GAAP profitability comes in the wake of a series of financial health reports from a number of European neobanks, or challenger banks as they are often called. The numbers showed huge growth and heavy losses. If Chime's numbers hold up when we have its eventual S-1 - the countdown begins - it will be among the healthiest startups of its cohort in financial terms, in our opinion.
Finally, the company is trying to paint itself as a kind of software company and not a fintech company. This is a move to attract better revenue multiples when it comes time to defend its new $ 14.5 billion valuation. Software companies have insane multiples these days, as evidenced by the debut of the blockbuster Snowflake.
Here's how Chime thinks of himself, via CNBC:
"We're more like a consumer software company than a bank," Britt said. "It's more of a transaction-based, compute-based, highly predictable, highly recurring and highly profitable business model."
The key phrases are "software company" and "highly predictable, highly recurring and highly profitable". Indeed Chime will argue that interchange revenue should fall under the SaaS umbrella given their regularity. Investors will decide how to display that tone. If it works, perhaps fintechs are more valuable than expected. And those fintechs with obvious SaaS components, like Acorns, might be nice when it comes to making the fintech versus SaaS argument.
Regardless, it's another huge round for Chime, making it a good day for the highly regarded fintech industry.
