San Francisco-based mobile banking startup Chime announced this morning it has raised an additional $200 million in Series D financing led by DST Global, valuing its business at $1.5 billion. The oversubscribed round also included participation from new investors Coatue, General Atlantic, ICONIQ Capital and Dragoneer Investment Group, along with existing investors Menlo Ventures, Forerunner Ventures, Cathay Innovation and others.
To date, Chime has raised approximately $300 million, including last year’s $70 million Series C, which then saw the company valued at $500 million.
With the new funding, Chime has now raised the most funding and has the highest valuation among other U.S. challenger banks.
The company is now one of several going after a younger, millennial audience who no longer sees the need for banks with physical branches, and who are sick of being nickel-and-dimed by bigger banks’ numerous fees. Like others in this space, Chime offers a “no fees” bank account, which won’t penalize users for things like dropping below a minimum balance or even overdrafts.
On top of this is a modern-day banking app with features that make it look like it was actually built by a technology company — not a traditional bank. That’s because its team’s background is a mix of both tech and finance. Chime’s co-founder and CEO Chris Britt previously worked at Flycast, was an early comScore employee and worked at Visa and Green Dot; co-founder and CTO Ryan King spent time at Plaxo and Comcast before Chime.
Chime also includes a couple of innovative features that help differentiate it from the other mobile banking apps on the market. This includes an automatic savings feature that rounds up purchases to pocket the change; another feature that automatically saves 10 percent of your paycheck into Chime’s savings account; and one that offers a no-fee paycheck advance that makes your money available sooner.
To date, customers have opened more than 3 million FDIC-insured bank accounts on Chime, which makes it the largest brand in its category, the company claims. (This appears to be true. SoFi had 500,000 members as of last year. Simple doesn’t disclose its account base beyond “hundreds of thousands.” Moven and Varo Money are smaller, according to American Banker’s round-up.)
Its size, scale and growth trajectory, perhaps, have aided Chime in poaching a few execs from its other fintech businesses — including rivals. For example, the company recently added Chime VP, Risk Brian Mullins, who was the former head of Risk Ops at Square; and Chime GM, Lending Aaron Plante, who was the former Business Unit leader for Student Loans at SoFi.
The company says it plans to use the new investment to continue to accelerate growth and launch new products, including those in lending and credit. It also plans to double its San Francisco-based team to more than 200 employees and expand its leadership.
“We’re excited to welcome some of the world’s leading growth investors to Chime,” said Britt in a statement about the funding. “Banking should be free, helpful and easy to use but traditional banks are reluctant to embrace this reality. We aim to set a new standard in the industry by using technology to create services that are truly aligned with the best interests of consumers.”