FinTech News
Report: Varo Bank Raises $29 Million Series G, Replaces CEO
According to reports, Varo Bank has not only raised a new round of funding but has also named a new Chief Executive Officer.
What’s happening at Varo:
As TechCrunch reports, per an SEC filing, Varo has raised a $29 million Series G. However, the FinTech bank had apparently been seeking $55 million in funding. Moreover, this comes after a 2023 $50 million equity round that valued the firm at $1.85 billion post-money — which was notably down from the $2.5 million post-money value it raised its 2021 Series E at.
In addition to the funding news, it looks as though Varo also has a new CEO. Varo co-founder Colin Walsh recently announced that he’d be departing from his role (although he’ll remain on Varo’s board of directors). Instead, Gavin Michael will serve as chief executive. Michael was previously CEO of Bakkt, but stepped down in March 2024.
While Varo is known as a FinTech “neobank,” in 2020, it became the first all-digital banking service to obtain a national banking charter. Since then, the bank has continued to expand its offerings to include credit-builder cards, short-term loans, and more.
What they’re saying:
Regarding the change in CEO, a spokesperson for the bank told TechCrunch, “This transition is about the next phase of Varo’s evolution.” They also noted, “Colin has known Gavin for 19 years, and after working closely with him these past months, Colin is confident he’s the right leader to build on the company’s foundation that he built for the last decade, while maintaining Varo’s commitment to financial inclusion.”
My thoughts:
When I first came across TechCrunch’s headline, I immediately checked to see how I could have missed Varo’s press release. As it turns out, there wasn’t one issued. To me, that suggests that Walsh’s departure isn’t quite as voluntary as the bank would surely like it to sound. And while the Series G raise itself may be good news, the fact that it’s short of its goal complicates things.
So do I think that Varo is in trouble? Well, while I wouldn’t say that this news spells disaster, perhaps we will soon see Varo shedding more of its attractive FinTech features and more resembling a regular bank. In other words, I wouldn’t be surprised if more fees and/or nerfed features come to fruition. Of course, this could then lead to churn — and, from there, it’s anyone’s guess as to what happens next (an acquisition perhaps?). Then again, with Michael’s crypto background, maybe Varo ends up going in that direction instead.
That said, it’s too early to catastrophize the situation or speculate about other major changes that could occur. Instead, I look forward to hearing more about Michael’s vision for the company and where he plans to take Varo from here.
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