Starling Bank Secures £200m Funding Round

Anne Boden, the founder of Starling, shared with TechCrunch that the U.K.-based challenger bank anticipates achieving profitability by the end of the year; however, the bank is simultaneously pursuing further funding opportunities.

Reliable sources indicate that Starling has engaged Rothschild to secure a new investment of £200 million. The prospect of profitability is a key factor attracting attention from private equity firms, according to one source. Starling has not provided a statement on this matter.

To date, Starling has secured £363 million in funding, including a £100 million grant from the government. The bank currently serves 1.9 million customers. Following the introduction of business banking services in March 2018 and participation in the U.K. government’s bounce-back loan program designed to support businesses affected by the pandemic, Starling now manages over 280,000 business accounts for self-employed individuals and small and medium-sized enterprises.

During a recent conversation with TechCrunch, primarily focused on her recently published book detailing Starling’s origins, Boden expressed her long-term goal of taking the company public. She stated, “My intention wasn’t to be acquired by a larger financial institution.” Boden further added, “An IPO is my objective, and I am strongly considering that path.”

Achieving an IPO will likely necessitate additional capital infusions over the coming years to maintain a compelling narrative for potential public investors. This includes plans for continued growth within the U.K. and significant expansion into European markets.

Looking ahead, potential mergers and acquisitions are also a possibility. At the LendIt Fintech Europe 2020 virtual conference in October, Boden highlighted Starling’s ongoing expansion of its services for small and medium-sized enterprises, noting that SME loans now represent the largest portion of the bank’s lending portfolio, currently nearing £1.5 billion. She also indicated that acquiring companies specializing in SME lending is under consideration.