Digital bank Chime quadruples valuation in less than a year to $5.8 billion as it takes on megabanks
May 4, 2020
- Chime, valued at $1.5 billion in March, is now pegged at $5.8 billion just nine months later, according to people with knowledge of the matter.
- The leading U.S. digital bank raised a record $500 million in a Series E, showing that massive funding rounds are still available for some start-ups.
- Chime will use the money to build on its torrid growth, including doubling the company’s headcount by 2020 and potentially acquiring competitors, the people said.
Chime, the largest of a new breed of branchless U.S. banks, raised $500 million in a series E round it closed recently valuing the company at $5.8 billion, according to people with knowledge of the situation. That is a remarkable increase from its last round nine months ago, when it raised $200 million at a $1.5 billion valuation.
But Chime appears to have struck on a winning formula: It targets the disaffected customers of traditional banks with no-fee accounts, free overdrafts and early direct deposits on paychecks. That’s led to torrid growth, going from 1 million accounts last year to about 6.5 million this month.
Still, in the wake of the WeWork debacle, there is greater skepticism of money-burning start-ups with stratospheric valuations, and Chime will have to prove that it can maintain growth with an eye towards profitability. In recent months, funding rounds in Silicon Valley are taking longer to close, and in the case of digital bank Aspiration have stalled, as CNBC reported last month.
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