Neobank Chime, which reportedly has around 20 million customers, just closed a blockbuster $750M, bringing its valuation up to $25B and positioning it for an IPO in the first half of next year. The fund raise adds heft to investor enthusiasm around fintech startups, and builds on the momentum of other large fintechs – including Robinhood and Marqeta – that are going public.

Why should we care?
Chime’s fund raise indicates investor confidence in its business model, which is to offer banking services with partner banks. While Chime has made impressive customer gains, there are questions around the sustainability of the model, especially since many of Chime’s customers don’t consider their Chime account as their primary one, and there may be a limit to a business model over-reliant on a cut of interchange fees. The funding, according to Chime, will be used to grow operations and launch new products and services. A new infusion of capital would also allow it to make strategic acquisitions to help the company scale more quickly. While Chime has successfully outpaced many of its rivals on customer numbers, the company faces a competitive field of neobanks, including many which focus on specific segments of the population. In addition, retailers (particularly Walmart) are interested in banking and financial services, cutting into Chime’s addressable market. Regardless, Chime doesn’t see the space as a winner-take-all market. “There’s an excitement and enthusiasm around technology companies, fintech companies like Chime, to design and deliver more consumer-friendly services that are actually helpful,” CEO Chriss Britt said in an interview.