Pre-IPO Pedia | Valued at $30B, digital banking giant Chime prepares for IPO
The epidemic has promoted the development of mobile banking services, and some online financial industries are growing rapidly.
Coinbase's revenue increased by 12 times, and Upstart Holdings' revenue increased by 11 times within a year. As the largest digital banking in the United States, Chime also has reported tremendous growth.
According to Chime's CEO Chris Britt, Chime will achieve positive earnings before interest, tax, depreciation and amortization in 2020, and its transaction volume and revenue will triple year on year. Chime's revenue of $200 million in 2019, nearly four times that of 2018.
The fintech unicorn, founded in 2013, has seen its valuation soar in less than three years, from $1.5 billion in early 2019 to $14.5 billion in late 2020, and more than 70% to $25 billion a year later.
Based on the latest valuation, Chime's valuation surpasses Robinhood, an Internet brokerage in the United States. It has become the second largest fintech unicorn in the United States, after Stripe, according to Crunchbase.
How did Chime create such a growth story? IPO Buzz takes you to the story of Chime.
Chris Britt has served as senior product director at Visa and chief product officer and senior vice president at Green Dot.
Ryan King, a Stanford Computer Science graduate, was vice president of engineering at Plaxo and has also worked at Comcast and Microsoft.
Chris Britt's own experience made him realize that although Green Dot has a digital banking, it is not fully functional, and many users can hardly afford to open an account with a traditional bank.
In 2013, Chris Britt and Ryan King founded Chime in order to provide users with services and benefits that mainstream traditional banks could not provide, expanding the company's customer positioning from the middle class to the group without traditional bank accounts.
Chime, which does not have a separate banking license, has partnered with Bancorp Bank and Stride Bank to provide customers with near-zero fee digital banking services.
According to statistics, in 2017, the U.S. banking industry collected more than $34 billion in bank fees, with an average household paying $329, of which $250 was credit card-related fees.
Chime can meet the needs of customers for consumption, savings and overdraft, and does not charge any other fees, such as account monthly fees, service fees, foreign transaction fees, minimum balance requirements and other traditional bank charges.
Chime has a unique automatic savings function, that is, when a user completes a consumption, the system will round up the consumption amount to a whole number, and then automatically deposit the fraction into the consumer's "savings account".
It also provides a free overdraft service of $100 for customers who deposit more than $500 per month. These strategies have attracted a large number of young people to open accounts, and according to its CEO, the number of users of Chime is about 8-12 million.
Since its establishment, Chime has experienced eight rounds of financing, mainly from SoftBank Vision Fund, General Atlantic, Tiger Global Management, Coatue, Menlo Ventures and so on.
Several actions that are highly concerned by the market include:
On September 17, 2018, Chime made an equity acquisition of Pinch, a credit service company.
In 2019, Chime received a total of $700 million in D + E rounds of financing from DST Global,General AtlanticandMenlo Ventures.
At the same time, with a $500 million E-round financing, it broke the record of the highest single financing of a start-up bank, which was previously held by NuBank of Brazil, the world's largest digital banking, at $400 million.
On September 18, 2020, Chime received a $533.8 million round F financing fromGeneral AtlanticInvestment andTiger Global Management.
On August 13, 2021, Chime received a $750 million G round of financing led by Sequoia and followed by Softbank andTiger Global Management.
Chime's valuation growth has been impressive. After raising 750 million in Series G funding last August, it is valued at $25 billion, more than twice Robinhood's valuation.
Many people are curious about the profit model of Chime now that the financial services are almost free. The answer is that Chime makes money from the merchants.
When the user consumes through the VISA bank card, part of the fee paid by the merchant to the VISA company is split to Chime.
Chime provides users with "consumption accounts" and "savings accounts", in which "consumption accounts" do not provide any interest on deposits, but "savings accounts" have a high annual interest rate of 1.6%.
Chris Britt revealed that Chime achieved positive EBITDA in 2020, benefiting from the COVID-19-related economic lockdown and stay-home orders.
Both transaction volume and revenue have tripled compared with 2019, and its revenue in 2019 is $200 million, which is also growing rapidly compared with 2018.
Chime will become ‘IPO-ready’ within the next 12 months, Britt said in September, 2020, although it isn’t locked into going public in that time frame.
On August 13, 2021, after Chime raised $750 million, relevant sources revealed that this round of financing paved the way for the IPO in the first half of 2022.
A person familiar with the matter said that the company's revenue in 2021 could reach $900 million to $1 billion. It also said that Chime was recently in talks to go public at a valuation of $35 billion to $45 billion and planned to launch an IPO in March this year.
Mooers, have you ever used Chime? Is everyone optimistic about the development prospects of this business that continues to have zero handling fees?
Would you invest in the largest digital banking in the United States if it goes public?Follow me to join the latest discussion!
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Thosemine : There are two rather big reasons Chime changed the banking industries.. One was Spot me. short a few bucks, Let Chime Spot you so no overdraft, nor returned payment issues. Within guidelines.. The second, they got NetSpend and greendot to come off growing monthly fees by those two suck. plus loading fees. Chime though has dropped ball not publicly traded stock or at minimum, crypto. That as long said, as a member, I hope canafford a few come time. Chime deserves a good turn out
BullRunner : I have a chime card but never used it. That is a huge amount to pay for savings. I will check into it more. I also read that Sofi will be offering totaling free banking with no over draft fee'd and a 1.0% annual.