Varo Bank Secures $63 Million in New Funding

Varo Bank, the first U.S. neobank to receive a national bank charter, has announced a new funding round of $63 million. This investment will fuel the bank’s expansion and community impact initiatives.

Investment Led by Russell Westbrook

The funding round was spearheaded by NBA star Russell Westbrook, who will also serve as an advisor. His focus will be on guiding Varo Bank’s programs designed to support underserved communities, particularly communities of color.

Russell Westbrook’s investment was made through Russell Westbrook Enterprises, which has previously invested in companies like Genies, a social avatar startup.

Existing Investors and Total Funding

Varo Bank’s existing investor base includes prominent firms such as Warburg Pincus, The Rise Fund, Gallatin Point Capital, HarbourVest Partners, and funds managed by BlackRock. Last year, the bank raised $241 million in Series D funding.

With this latest round, Varo Bank’s total funding to date reaches $482.4 million.

Competitive Landscape

Established in 2017, Varo Bank operates within a rapidly growing market of all-digital banks in the U.S. Key competitors include Chime, Current, N26, Level, Step, Moven, Empower Finance, Dave, GoBank, Aspiration, Stash, and Zero.

Key Features and Services

Similar to other neobanks, Varo Bank provides a readily accessible bank account without monthly fees or minimum balance requirements. Customers benefit from a modern mobile app, high-interest savings options, and access to a network of 55,000 fee-free Allpoint ATMs.

Notably, Varo Bank does not maintain a network of physical branches.

National Bank Charter and Regulatory Approvals

In a significant milestone, Varo Bank received a national bank charter from the Office of the Comptroller of the Currency (OCC). It also secured approvals from the FDIC and Federal Reserve, officially becoming Varo Bank, N.A.

Growth and Account Numbers

Currently, Varo Bank boasts over 3 million bank accounts. The bank reports a year-over-year increase of more than 900% in deposits and a rise of over 300% in spending on its platform.

Focus on Financial Inclusion

Russell Westbrook’s decision to invest in Varo Bank stems from the bank’s commitment to addressing financial inequality. The bank offers features like two-day early payroll deposits, competitive savings rates, and Varo Advance, a short-term cash advance line of credit.

Varo Advance provides qualifying customers with access to up to $100, and it remained fee-free through March 2021 due to the COVID-19 pandemic.

Future Plans

The newly acquired funds will be allocated to expanding Varo Bank’s services. Furthermore, the bank will collaborate with Russell Westbrook to develop a community impact program focused on enhancing financial literacy in underserved communities, as reported by TechCrunch.

Westbrook’s Statement

“The banking system has ignored or underserved a large portion of the American population — particularly communities of color. I’m passionate about making lasting social change and creating a stronger and more inclusive system,” stated Mr. Westbrook. He further expressed his enthusiasm to work with Varo to drive economic revitalization for those who have historically lacked access.

Advisory Details

Russell Westbrook Enterprises received exclusive advisory services from Jefferies LLC during this transaction.

Clarification Regarding Investors

It has been clarified that Varo’s existing investors did not participate in this specific funding round. Instead, the funds came from other venture capital firms, family offices, and individual investors. A previous statement indicated they had “joined” existing investors, which was inaccurate.