Varo Money raises $100M, refiles deposit insurance application
Varo Money has raised $100 million in new funding as the challenger bank inches closer to gaining regulatory approval for a national bank charter.
New and existing investors led the Series C round, including Warburg Pincus, TPG Capital's The Rise Fund and Gopher Asset Management. To date, Varo has raised $178.4 million in funding.
Varo revealed the funding on Tuesday, a day after it refiled a deposit insurance application with the Federal Deposit Insurance Corp. The San Francisco company originally filed with the FDIC in early 2018, but later pulled the application. It has already won approval for a national bank charter from the Office of the Comptroller of the Currency last year, but it must get the FDIC to sign off before it can accept insured deposits.
The FDIC has previously raised concerns with Varo over key positions within the company, CEO Colin Walsh told American Banker in April. Varo responded with the hires of two former OCC officials, Amy Friend and Deven Bhatt, who both joined in April. It also hired Philippa Girling, who has held risk management positions at Investors Bank and Capital One, as chief risk officer. Deep Varma, the former vice president of engineering at the online real estate firm Trulia, joined Varo in early February at the chief technology officer.
Varo expects to hit 750,000 registered users this month. The company said it has tripled its customer base in the last year. Those users have deposited some $600 million total, including over $50 million into savings. Varo’s customers earn up to 2.80% APY if certain criteria are met.
In any deposit-insurance application like Varo's, the FDIC has three business days from the filing to provide a written response acknowledging receipt of the application. After that, the FDIC has up to 45 days to consult internally, and with other relevant agencies, to decide whether the application is complete and accepted, or if additional information is needed.
If the application is preliminary accepted, the FDIC conducts a field examination with other regulators, generally taking from 60 to 90 days. The FDIC aims to complete the entire process within 120 days of receipt, but the agency’s own records show approval could average up to 171 days for deposit insurance.