fintech N26 has raised a Series E round of $900 million which has given it a new valuation of $9 billion. That represents a huge jump from the company's Series D valuation of $3.5 billion. The Berlin-based startup operates a digital bank with 7 million customers in 25 countries.
Third Point Ventures y Coatue Management They lead this round. Dragoneer Investment Group and some of the previous investors of N26 also participated.
"It gives us plenty of time over the next three to four years to come up with an IPO," said co-founder and CEO Valentin Stalf. N26 it also plans to hire 1.000 people "as soon as possible."
N26 offers bank accounts and debit cards that are managed from the mobile. Opening a bank account is quite easy as there is no need to go to a branch and fill out a lot of paperwork. After that, the clients of N26 they get a standard bank account with their own account numbers and a virtual card that they can add to Apple Pay or Google Pay.
Users can send and receive money from their account, spend and withdraw money with the card. In addition to that, the company has launched various financial products, starting with premium subscriptions.
If you want to use N26 As the main bank account, it is possible to subscribe to N26 Smart, N26 You or N26 Metal. Those subscriptions allow you to create more sub-accounts, get higher limits and access to more card designs. N26 You and N26 Metal customers also get insurance products as part of their subscriptions.
In addition to premium subscriptions, users of N26 they can access their own or third-party products, such as telephone and electronic insurance, credit products, transfers, etc.
Doubling presence in Europe
Like many tech startups, the pandemic affected the strategic plans of N26. This involved modifying the product offering to optimize profitability and long-term financial sustainability. After impressive growth in multiple markets, the fintech has refocused on its core market (Europe) and core products (revenue from card transactions, subscriptions, and banking products).
In particular, Valentin Stalf repeatedly stated that the company's focus is Europe. For starters, there is plenty of room for growth in its strongest markets. “If you look at the penetration we have, in Paris we have 5 to 7% of the population. In Berlin, it is also 5 to 7% of the population”.
"The market is still huge, so it makes a lot of sense to continue our investments in those markets," he added.
In addition to Central Europe, N26 it now plans to aggressively expand into Eastern Europe throughout 2022. This is a significant shift in the company's international strategy. According to the company's website, it still plans to release N26 in Brazil, but there is no release date. In the US, people cannot register directly, they must first join a waiting list.
However N26 wants to be market leader. And there are numerous new fintechs around the world springing up aligned with local cultures. In Brazil, Nubank it has tens of millions of customers. In the U.S, Chemistry he is also well positioned to become a dominant player.
“Currently we dominate in central Europe and then we have Revolut in the UK and Eastern Europe mainly," Stalf said. So N26 it wants to increase its size presence in Central Europe and expand to Eastern Europe, where there is still room for competition. N26 plans to open an office in Belgrade, Serbia.
Building an adult company
Startups tend to move fast and create disruption, as the old Facebook motto used to say. Y N26 now he is trying to move away from this reputation for unpredictability.
Although the company has a full banking license in Germany, the German banking regulator keeps a close eye on N26. In 2019, BaFin criticized N26 by some of its internal processes. At the beginning of this year, BaFin it also imposed a fine of 4,9 million.
"The fine we received is a fine for 50 cases that we sent to the regulator too late, not within 72 hours," Stalf said. He is not justifying the fine and claims that N26 going to pay it According to Stalf, the company has improved its internal processes since those cases occurred.
“We have invested heavily in regulatory issues over the last 18 months,” he said. N26. We'll soon find out if that's true, since N26 and the German regulator have decided to temporarily limit new subscriptions to a maximum of 50.000 to 70.000 new customers per month. If the German regulator believes that N26 is doing a good job on money laundering, know-your-customer policies and the like, those restrictions will be gone in a few months.
As well sifted cast doubt on N26 for its capital incentive plans for employees. Stalf admitted that he has been too restrictive so far. The company plans to expand its employee capital pool. 100% of employees will participate in the Employee Stock Ownership Plan (ESOP). The employees of N26 You will learn more about the terms of the plan shortly.
