The global adventure the capital bet on neobanks is massive. The London-based Starling Bank has raised more than $ 900 million through Crunchbase. The same data source says Chime raised $ 1.5 billion. Monzo raised nearly $ 650 million. And the list goes on: e-commerce neobank Juni raised $ 21.5 million last month. Novo, a neobank focused on SMEs, raised $ 41 million in June. Nubank raised $ 2.3 billion. And FairMoney has blocked over $ 50 million.
Again and again.
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But despite our general tendency to lump bank-focused fintech providers that serve consumers, business clients, or both into a single bucket, there are big differences in the performance of different neobank players in the market.
In August 2020, The Exchange noted that many neobanks were racking up significant losses. Our reading at the time was that the paid-up capital in the fintech category was being aggressively invested in the name of growth. Based on recent results, this view holds.
But not all neobanks are the unprofitable businesses they once were. Chime reported in September 2020 that it was generating positive unadjusted EBITDA. It’s a more stringent profit measure than the one Lyft has used recently to claim its rise in profitable business; Lyft posted positive Adjusted EBITDA in its most recent quarter, but spent cash to fund operations and recorded a significant net loss during the period.
And Starling Bank reached what it describes as profitable territory in October 2020. Things have changed since our first look at neobank results.
The trend of positive news on neobanks continued in June, when Revolut announced its recent financial performance. The company posted rather negative aggregate results for the 2020 period. But when we took a deeper look at its quarterly results, we saw the image of a FinTech company increasing its gross margins and revenues while nearing market neutrality. adjusted net income by the fourth quarter of 2020. We were impressed.
This morning, let’s add to our ongoing research into neobank results by analyzing data recently released by Starling Bank and Monzo. As we’ll see, while some neobanks do manage to clean up their books and seek profit – or achieve profitability – not all are in the dark.