UK digital bank Starling valued at $ 1.5 billion after Fidelity backing
Starling Bank banking app on smartphone.
Adrien Dennis | AFP via Getty Images
LONDON – Starling Bank, a digital-only challenger bank in the UK, said on Monday it had raised £ 272million ($ 376million) in an investment round.
The new cash injection, led by Fidelity Investments, values Starling at £ 1.1bn, or $ 1.5bn. This elevates him to the ranks of European unicorn companies – private companies valued at $ 1 billion or more.
Qatar’s sovereign wealth fund, the Qatar Investment Authority, has also invested in Starling, as well as the UK pension scheme Railpen and the Millennium Management hedge fund.
“Digital banking has reached a tipping point,” Starling CEO Anne Boden said in a statement on Monday. “Customers now expect a fairer, smarter and more human alternative to the banks of the past and this is what we are offering them at Starling as we continue to grow and add new products and services.”
Boden added: “Our new investors will bring a wealth of experience as we enter the next stage of growth, while the continued support of our existing funders is a huge vote of confidence.”
Starling said he would use the money to expand in Europe and for planned mergers and acquisitions. Last year, the company resumed talks to secure a banking license in Ireland, after initially putting its international expansion plans on hold due to the coronavirus pandemic. Meanwhile, Boden has already expressed interest in buying from a rival lender.
“We’re probably going to acquire something in 2021,” Boden said in an interview last year. “A lot of lenders are going to re-evaluate their future and we are growing very, very fast. We are always looking for opportunities.”
Boden denied a report claiming that JPMorgan and Barclays had shown interest in buying Starling. She previously indicated that the start-up would seek an initial public offering.
Starling is one of the most important digital banks in Europe. Founded in 2014 by Boden, a former banking executive, the company has attracted 2 million users and now represents 5% of the UK small business banking market, with 300,000 small business customers.
As national rival Monzo floundered, with its valuation plunging 40% last year amid the coronavirus pandemic, Starling has managed to achieve something that many fintechs have struggled with: achieving profitability. The company made £ 800,000 in profit in October and claims it has been consistently profitable ever since, with net income now exceeding £ 1.5million per month. The company says it is now on track to report its first full year of profit.
Starling has received a big boost from the UK’s coronavirus lending programs, becoming one of several fintech companies to offer government-backed loans to businesses during the pandemic. It now has gross loans of over £ 2bn and deposits of £ 5.4bn.