Digital bank Current app and credit card
Current, a digital banking start-up that gained momentum during the pandemic, tripled its valuation to $ 2.2 billion just five months after its previous round of donations, CNBC learned.
The company raised $ 220 million in a Series D round led by new investor Andreessen Horowitz, according to Stuart Sopp, the current CEO. The previous round of the New York-based startup in November was valued at $ 750 million.
Current is tracking bigger competitors like Chime and Square’s Cash app by delivering low-cost financial services through a mobile app. The migration of banking to digital services, which has been going on for years, accelerated during the coronavirus pandemic. Sopp said the company now has nearly 3 million customers after hitting 1 million last year.
The fundraising shows Current belongs in the same conversation as other leading digital banks threatening established institutions, said Sopp, a former Morgan Stanley dealer who founded Current in 2015. It also shows the ongoing impact of the steps central banks have taken to flood the markets with money in response to the pandemic, Sopp said. Investors are looking for returns wherever they can be found, including private markets, he said.
“We have exceptional investors who have studied Current extensively and believe that we are one of the winners in this neobank space,” Sopp said in a Zoom interview this week. Series D also included TQ Ventures from new investor Scooter Braun, as well as Tiger Global, Avenir and other investors who participated in earlier rounds.
“We will expand our product and our demographic reach over the next few years,” added Sopp. “We are here to challenge the existing banking community. In the next 10 or 20 years, most young adults will not see branches as an alternative to banking – they will only be digital and they will have to catch up with us.” . “
The flow has grown by focusing on Americans who make about $ 45,000 a year and may not be well served with traditional bank accounts that include physical branch access, but also overdraft and maintenance fees.
The average age of the customers is 27 years. They are grouped together in cities like Atlanta, Chicago, Las Vegas and the New York borough of Brooklyn. Half of Current’s customers are black, Sopp said last year.
“We’re trying to help those who live from paycheck to paycheck who are motivated and determined and who want to see a better future,” said Sopp.
While Andreessen has invested in Robinhood, Stripe and Plaid, the stake in Current is the first of a customer-facing company in the challenger bank space, which often has a technology player working with a separate FDIC-backed institution. Andreessen has also invested in Cross River, one of the chartered banks that power fintechs, and the payroll firm Earnin.
Sopp was in talks with Andreessen Horowitz for years before the company decided to invest, according to the CEO and David George, a general partner of the company.
“A big part of building the relationship with the Founder over time is seeing how they work,” said George. “With Stuart we were able to observe their product speed, they are extraordinarily fast and so tailored to the wishes and needs of the market.”
Become a smarter investor with CNBC Pro.
Get stock picks, analyst calls, exclusive interviews and access to CNBC TV.
Sign in to start a free trial today.