- Online banking service Chime has reportedly raised $500 million Series E in funding at a valuation of $5.8 billion
Online banking service Chime has reportedly raised a $500 million Series E round of funding at a valuation of $5.8 billion, according to CNBC’s sources. This is a big jump from nine months ago when Chime raised $200 million at a valuation of $1.5 billion.
The $500 million round of funding was led by DST Global. And it is the largest single equity investment for a challenger bank as it surpassed the $400 million round invested in Brazil-based NuBank.
According to CNBC’s sources, Chime CEO Chris Britt is going to use the funding for developing new products and doubling the employee count by the end of 2020. Plus the company will be opening a new office in Chicago. And the company may look into some acquisitions.
What distinguishes Chime from its rivals is its no-fee accounts, free overdrafts, and early direct deposit options. As a result, Chime went from 1 million accounts last year to 6.5 million now.
It is estimated that Chime will generate $300 million in revenue this year, mostly from swipe fees on debit cards. This means that its valuation is about 20 times revenue. However, Chime generates more revenue from each customer than it does to acquire them. This sets up a path to profitability for the company. And Chime typically breaks even on each of its customers in under a year.
Chime adds around 150,000 direct deposit users every month. Plus the company recently hired Mark Troughton as its chief business officer. Troughton is the former president of Ring (acquired by Amazon).
Chime has processed over $30 billion in transactions. And in an interview earlier this year, Britt said that the company is planning to launch a new feature to help users increase credit scores.