Current, a digital banking start-up that has gained momentum during the pandemic, has tripled its valuation to $2.2 billion just five months after its previous fundraising round, CNBC has learned.
The company raised $220 million in a Series D led by new investor Andreessen Horowitz, according to Current CEO Stuart Sopp. The New York-based start-up’s previous round in November valued it at $750 million.
Current is chasing bigger competitors including Chime and Square‘s Cash App by providing inexpensive financial services though a mobile app. The migration in banking to digital services, which has been underway for years, accelerated during the coronavirus pandemic. Sopp said the company now has almost 3 million customers after hitting the 1 million mark last year.
The fundraising shows that Current belongs in the same conversation as other leading digital banks that are threatening established institutions, said Sopp, a former Morgan Stanley trader who founded Current in 2015. It also shows the continuing impact of moves central banks have taken to flood markets with money in response to the pandemic, said Sopp. Investors are searching for yields wherever they can be found.
“We have exceptional investors who have looked at Current deeply and believe that we’re one of the winners in this neobank space,” Sopp said this week in a Zoom interview. The Series D also included new investor Scooter Braun’s TQ Ventures, as well as Tiger Global, Avenir and other investors who have participated in earlier rounds.
“We will be expanding our product and our demographic reach over the next few years,” he added. “We’re here to challenge the existing bank fraternity. Over the next ten or 20 years, most young adults won’t see branches as a viable alternative to banking, it will be digital only, and they will have to catch up with us.”
Current has grown by focusing on Americans who earn about $45,000 a year and who may not be well served with traditional bank accounts, which include access to physical branches but also include overdraft and account maintenance fees.
The average age of customers is 27, and they are clustered in cities including Atlanta, Brooklyn, Chicago and Las Vegas. Half of Current’s customers are Black, Sopp said last year.
“We are trying to help whoever is living paycheck to paycheck, who’s driven and determined and wants to see a better future,” Sopp said.
While Andreesen has invested in Robinhood, Stripe and Plaid, the stake in Current is its first in the challenger bank space, which often feature a technology player that’s partnered with a separate FDIC-backed institution. Andreesen has also invested in Cross River, one of the chartered banks that help power fintechs, and paycheck advance-firm Earnin.
Sopp had been in talks with Andreessen Horowitz for years before the company decided to invest, according to the CEO and David George, a general partner at the firm who focuses on growth investing.
“A large part of building the relationship with the founder over time is to see how they operate,” George said. “With Stuart, we were able to watch their product velocity, they’re extraordinarily fast and so attuned to what the market wants and needs.”
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