Starling, the British digital challenger bank which is expected to launch services in Ireland shortly, has raised £60million (€70.9 million) to fund the growth of its business banking service and a long-planned international expansion.
The deal, led by asset manager Merian Global Investors, is the first in what is expected to be a wave of major fundraising rounds by app-based banks in the next few months.
Monese and Monzo have both been in talks to raise up to £100million from investors in the first half of this year, while Revolut is close to finalising a $500million equity round that people close to the company say could be completed as early as this week.
Anne Boden, Starling chief executive and a former chief operating officer at AIB, said the cash would help it launch in Ireland later this year, after Brexit-related uncertainty led it to delay its earlier expansion plans.
“Without Brexit, we could have used our passport to expand across Europe,” she said. “It’s fair to say that the uncertainty has slowed us down, but now we have certainty and we are fully charged and ready to go.”
The decision to focus on Ireland and continental Europe sets Starling apart from peers such as Monzo, Revolut and N26, which have attempted to break into the US market. Ms Boden, who was previously chief operating officer of Allied Irish Banks, said: “We believe that we have a better chance of success [IN EUROPE]. The US is a tough market, and Europe has not yet benefited from the fintech revolution that started in the UK.”
The latest investment brings the total Starling has raised since its launch in 2014 to £323 million, including a £100 million prize from a government-designed scheme to boost competition in the UK business banking market.
The company declined to comment on its valuation.
Merian, which was spun out of Old Mutual in 2018, invested through its Merian Chrysalis fund, which holds stakes in other fintechs including Klarna and TransferWise. Starling's majority shareholder JTC - owned by secretive Austrian-born investor Harry McPike - also invested in the latest round, and Ms Boden said the two backers had committed to provide further funding later in the year.
Nick Williamson, Merian Chrysalis co-manager, said: "Starling has continued to innovate and has already established itself as one of the most highly regarded UK challenger banks. Its superior user experience is winning over retail and business customers and we believe 2020 is set to be a defining year for the business."
In addition to the investment, Starling said it would also award new shares to all of its 800 employees. Starling staff and management will own 20 per cent of the business after the deal is completed, with Merian and JTC controlling the rest.
- The Financial Times Limited 2020
