There’s more funding for the challenger/neo/smartphone banking space as Berlin’s Number26 announced $40m of fresh funding. The firm says it now has 200,000 customers in eight countries.
— NUMBER26 (@number26) June 21, 2016
The Series B funding was led by Horizons Ventures, with participation from Battery Ventures, Valar Ventures, Earlybird Ventures, Redalpine Ventures. Angel investment also came from Robert Gentz, David Schneider and Rubin Ritter.
The latest round takes funding to $53m since launch last January.
Valentin Stalf, founder and CEO, Number26, says: “Even given our success to date, we believe we are only at the beginning of our journey to bring better mobile banking to millions of customers across Europe, transparently and at much fairer prices.”
The firm was in the headlines a couple of weeks ago for less positive reasons. Number26 cancelled “several hundred user accounts – in itself not that unusual, but ran into a small PR storm of criticism after failing to explain why to those customers.
In an explanation the firm said the cancellations were down to high numbers of cash withdrawals, on which the firm incurs a fee (as high as EUR1-2 in Germany). As the firm’s basic checking account is free – a key customer acquisition strategy as it continues trying to rapidly grow its user base – this wasn’t sustainable where customers were making withdrawals as often as every day.
The company has apologised profusely for handling the situation badly and promises greater transparency on terms in the future. While adoption of new brands in finance is on the rise, communication and transparency with their early adopters is absolutely critical if they are to retain those first adopters and stand a chance of cracking the mainstream.
— NUMBER26 (@number26) June 8, 2016
The funding round totalled $61m, and will used to finance the company's global expansion plans.
Monzo also revealed its latest funding round last week.
A further £2.5m is expected to be raised from crowdfunding on Tuesday.
Funding Circle has perhaps started 2017 in a better way than most. The London-based lending platform that connects small businesses with investors has raised $100m (£82m) in equity investment.