N26 triples valuation to $ 9 billion, now worth more than Commerzbank

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The N26 logo displayed on a smartphone.

Rafael Henrique | SOPA Pictures | LightRocket via Getty Images

LONDON – German digital bank N26 said on Tuesday it had raised $ 900 million in a new round of funding that values ​​the company at $ 9 billion.

This is almost three times the valuation of N26 in its last private fundraiser and that means it is now worth a little more than Commerzbank, Germany’s second-listed lender. Commerzbank, listed in Frankfurt, has a market capitalization of 7.6 billion euros ($ 8.8 billion).

N26, which counts billionaires Peter Thiel and Li Ka-Shing as investors, raised fresh funds from Third Point, the hedge fund led by billionaire US investor Dan Loeb, and Coatue, while Dragoneer also invested.

Founded in 2013, N26 is one of several start-ups in Europe looking to challenge established banks with app-based checking accounts and little to no fees. Competitors include Revolut, recently valued at $ 33 billion, and Monzo.

Maximilian Tayenthal, founder and co-CEO of N26, said the company plans to spend the extra money to hire 1,000 people globally and launch new features like cryptocurrency trading.

“We want to attract more people with a focus on products, technology and safety,” Tayenthal told CNBC in an interview.

IPO ambitions

N26 now has 7 million customers in Europe and the United States and is on track to process $ 90 billion in transactions this year. The company recently acquired a banking license in Brazil, with a team of 40 employees already in the field in São Paulo. N26 plans to roll out its app publicly in the country over the next year, Tayenthal said.

N26 now has sufficient “financial leeway” to prepare for an initial public offering, Tayenthal said, adding that he expects the company to be “structurally ready for the introduction. on the stock market ”in the next 12 to 18 months.

“We are in no rush to go public,” Tayenthal said. “With increasing profitability, the kind of money we’re raising right now, it really takes the time pressure off. “

With plenty of money available in the private equity markets, many tech companies are choosing to stay private longer. Stripe, for example, raised funds at a valuation of $ 95 billion earlier this year, making them one of the most valuable start-ups in the United States

Several European fintechs have managed to reach valuations of several billion dollars amid booming investment activity. Revolut was recently valued at $ 33 billion in a funding round led by SoftBank, for example.

However, some investors have expressed concerns about their ability to make a profit.

N26 is still in deficit with losses of 216.9 million euros in 2019. Its European activity lost 110 million euros in 2020, against 165 million a year earlier. Tayenthal said N26 is not under pressure from investors to make a profit anytime soon.

Growing pains

As other financial technology companies, N26 recently faced growth problems. The company faced an outcry last year from staff at its Berlin office, who said at the time that confidence in management was at an “all-time low”.

Meanwhile, N26 was $ 5 million fine by BaFin, the German financial services regulator, for delaying in submitting suspicious activity reports used by authorities to investigate money laundering.

On Tuesday, the bank said it had reached an agreement with BaFin to limit the number of customers it receives each month to a maximum of 50,000 to 70,000. The watchdog is expected to publish the decision in a future order, said N26.

Tayenthal warned that the move would likely slow N26’s growth significantly in the near term.

“For a few months this will be important for the company,” he said.

When it comes to work culture, Tayenthal says the company has made efforts to improve employee representation in the company over the past year. The company has also started to foster a shift towards flexible working during the Covid-19 pandemic, he added.

“We were actually very confident that everyone was in the office as much as possible. We are moving away from that,” Tayenthal said.

“The [are] obviously some roles where you need to be in the office more regularly. And we also believe in bringing people together from time to time, but we’re going to move to a more flexible model. “

N26 is not the only fintech to embrace remote working. Revolut said he would allow employees to work abroad up to 60 days per year. Such measures contrast with the big Wall Street banks like JPMorgan and Goldman Sachs, which encourage workers to return to the office. Some major European lenders take a more flexible approach.

N26 said it would expand its staff share plan to cover all employees. Last year, Germany unveiled plans to reform its rules on employee stock options, a typical benefit of many tech start-ups.


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