U.S.-based challenger bank Current, which has now grown to nearly 3 million users, announced this morning it has raised a $220 million round of Series D funding, led by new investor Andreessen Horowitz (a16z). The funding swiftly follows Current’s $131 million Series C at the end of last year, at which point the company had doubled its user base over just six months to more than 2 million users.
As a result of the new round, the fintech company has roughly tripled its valuation in five months, to $2.2 billion.
Other participants in the round include returning investors Tiger Global Management, TQ Ventures (the fund managed by media executive Scooter Braun), Avenir, Sapphire Ventures, Foundation Capital, Wellington Management and EXPA. David George, who led the round with a16z, will become a Current board member.
Current began its life as a teen debit card controlled by parents, but later expanded to offer personal checking accounts powered by the same underlying banking technology. Like a range of modern-day “neobanks,” or digital banks, the Current app offers a baseline of standard features like free overdrafts, no minimum balance requirements, faster direct deposits, instant spending notifications, banking insights, free ATMs, check deposits using your phone’s camera and more. It also last year launched a points rewards program in an effort to better differentiate its service from the growing number of competitors and became one of the first banks to transfer the early round of stimulus payments during the pandemic.
These days, Current is partnering with creators, like the recently announced MrBeast (aka Jimmy Donaldson), who said last week on his YouTube channel that he will personally send $1 to the first 100,000 people who sign up using his Creator code. MrBeast is also an investor.
Like other fintechs in its same space, Current has benefitted from the younger generation’s adoption of mobile banking apps instead of larger, traditional banks, which they feel don’t serve their interests. Its average customer age is 27, for example. Digital banks can keep costs down by not having to pay for the overhead of brick-and-mortar locations, allowing them to roll out benefits like reduced or zero account fees and other consumer-friendly protections.
Current today continues to offer teen banking, in a challenge to mobile banking app Step, which has also leveraged social media influencers to get the word out with a younger demographic. But Step today is appealing to the 13 to 18-year-old crowd directly, offering banking services and a secured card. Current, meanwhile, targets its service to the parents.
Its teen account costs $36 per year, while personal checking is available both as a free and premium ($4.99/mo) service. The company in the past has said its primary focus is the more than 130 million Americans who live paycheck to paycheck. This continues to be its main drive today, though the mission may attract a broader slice of the American population over time.
“We are still focused on onboarding people to the financial system, making sure that everyone has access to everything, and then democratizing — or going out and getting that value — in this new world that’s being rewritten and bringing it back to as many people as possible,” says Current CEO and founder Stuart Sopp. “Now, in that increase of scope and time. I think we’re going to pick up more and more people.”
Current says the new funds will be used to grow the company and its member base as it expands it range of banking products. One key area of new investment will be cryptocurrency, it says, which will involve a partnership and an educational component to help Current’s users better understand the crypto market.
As it turns out, Sopp’s background includes crypto, in addition to Wall Street trading. In fact, an early version of Current designed by Sopp and CTO Trevor Marshall involved crypto.
“A little-known fact is that Current started with Bitcoin wallet addresses and Ripple gateways,” he says. But the team realized the technology was a little too nascent at the time, and moved to mobile banking. “We have this background, and this knowledge of how it all works. Now do we need to build it ourselves? No, I don’t think we need to build it all ourselves. There’s lots of good companies out there,” he says.
Crypto fits into Current’s vision of democratizing access to financial systems to those in the U.S. who are today underserved by traditional banking and investing products and services.
“There’s a ton of value being created [in crypto] and we want to make sure we have this nexus of providing safe, and trustworthy financial services in that world, as well as what we already exist in,” notes Sopp. “And then, lending, credit cards,” he adds, noting how important these moves are “done safely, in a respectful way for our demographic — because traditionally most of our members have a FICO score of 650.”
In addition, Current will use the new funds for hiring across all roles, including marketing, product, engineering, finance, customer success, fraud and risk, and, of course, crypto. The company today has 100 employees, and plans to grow to around 200 or 300 in the next 18 months.
Current’s fundraise remarkably falls on the same day that competitor Step and Greenlight, both which focus on families, also raised new rounds.
“This new generation of customers doesn’t want to bank in physical branches,” said a16z’s David George, in a statement. “We believe there will be a shift in the next 10 years to mobile and consumer-focused banking services powered by innovation in technology, and with Current’s exceptional growth over the past year, they’ve clearly demonstrated they’re at the forefront of this trend. Their product is among the best in the market, and they have proven an ability to reach customers who previously were unserved or underserved by traditional banks,” he said.