Digital banking giant Chime released Friday that it has raised $750 million in a Series G funding round that values the fintech company at $25 billion — nearly $10 billion higher than its last reported valuation in October 2020.
Chime’s latest round was led by Sequoia Capital Global Equities with participation from SoftBank, General Atlantic, Tiger Global and Dragoneer Investment Group.
Founded in 2013, Chime has claimed itself as a “fee-free and user-friendly banking app” that is attempting to challenge the traditional banking sphere. The platform also provides an accompanying debit card — on which the business earns interchange revenue — and auto-savings account.
On top of that, Chime also provides its services to in-person banks, primarily through its Chime checking account. Chime’s “SpotMe” feature all allows customers to make debit card purchases that overdraw on their accounts with no overdraft fees — a risky transaction to get in to but one that gives users a bit of mercy. As of early August, Chime also revealed users can utilize SpotMe to get cash from ATMs and cashback locations.
The latest funding round positions the company for a potential IPO in the first half of next year, according to The Wall Street Journal, citing sources familiar with the matter. In March, Reuters told a similar story, also citing from sources that the company had held preliminary talks with investment banks for a stock market floatation that could value it at more than $30 billion.
Chime said it would use the funds raised to scale its operations and launch new products and services.
The company also added Cynt Marshall, chief executive officer of American basketball team the Dallas Mavericks, Jimmy Dunne, vice chairman of investment bank Piper Sandler and Sue Decker, founder and chief executive officer of community building platform Raftr, as independent directors to its board.
Digital banking has taken off as a result of pandemic driven stay-at-home lifestyles highlighted by a number of other massive funding rounds and IPOs. Due, Ally, Current and others offer a various amount of tech centered on digital transactions and virtual payments, and all seem to be thriving.
In January 2020, just 4% of Gen Zers and Millennials considered a checking account from a challenger bank their primary account. By December 2020, that percentage had grown to 15%, according to a study from Cornerstone Advisors and StrategyCorps.
Digital wallet Eco closed a $60 million series B round just a month ago to boost its tech that functions by first connecting your bank account and depositing money into the app. Once your money is in there, it starts earning 2.5% APY. And then you can begin spending money at merchants like Amazon, Uber Eats, InstaCart and DoorDash.