Magazine article American Banker

Mission-Driven Varo Money Secures $45 Million from Investors

Magazine article American Banker

Mission-Driven Varo Money Secures $45 Million from Investors

Article excerpt

Byline: Penny Crosman

Varo Money, a mobile banking fintech that created a stir by applying for a national bank charter in July, announced $45 million in Series B funding on Thursday.

The cash infusion is notable both for what Varo is trying to do and the sources of the money.

Varo aims to help the masses take better financial control of their lives and lower the cost of banking.

"This next generation of consumers are looking for more affordable solutions that are technology driven, that let them solve everyday banking problems with a few taps of the phone," said Colin Walsh, its CEO and founder. "Our technology could help the masses, not just the people who can afford a private banker, to get ahead and improve their financial situations."

Walsh worked for 25 years in financial services firms like American Express, Lloyds and Wells Fargo and considers himself a "reformed banker."

In traditional banks, "there's a reliance on overdraft fees, minimum balance fees and things that are quite punitive for people who are just starting out and don't have lots of money," he said.

Varo provides checking and savings accounts, direct deposit, online bill payment, a debit card, predictive forecasts of cash flow, a line of credit and an unsecured loan through its app (currently with the backing of The Bancorp). There are no minimum balance requirements or foreign exchange and overdraft fees.

"We're looking at how we can lower the cost of banking, particularly for people who have volatile cash flows," Walsh said.

This mission attracted the attention of The Rise Fund, a fund led by the private equity firm TPG that's committed to achieving social impact alongside competitive financial returns. It was founded by U2 lead singer Bono, TPG Growth founder and managing partner Bill McGlashan, and Jeff Skoll, an entrepreneur, film producer and impact investor. …

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