Chime

Pre-IPO

Branchless mobile bank with no monthly account fees, which provides financial services via the app

Mark Price
$80 +65% a year
Annual Price chg.
+65%
Valuation
$5.00B
Funds Raised
$2.30B
Last Round
$700M 2021
Round Date
2021, G

About the Company

Chime is the US largest digital bank. It is a branchless mobile bank that allows users to access its services through an app. Customer’s Chime spending account and savings account come with a free Visa debit card.

Chime mobile application lets you control your savings, account balances and transactions, instantly transfer money to your friends, deposit paper checks by photo and much more.

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Unlike traditional bank accounts, there are no monthly account fees and minimum balance requirements, overdraft is fee-free. Chime doesn’t profit off of clients. Every time a customer uses his Chime debit card, Chime earns a small amount from Visa paid by the merchant.

Business Growth Phase

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Market Opportunities

Nearly 2 billion people in the world don’t have access to banking services. Digital banks represent a powerful tool for advancing financial inclusion, helping more and more people to manage their money effectively. PitchBook estimates that digital banks will serve 145 million people in North America and Europe by 2024.

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In 2018, the global digital banking market was valued at $804B and Research Dive predicts it will reach $1.7T by 2026, growing at a CAGR of 10%. In 2019, the digital banking market in North America was valued at $376B and is predicted to reach $721B by 2027, growing at a CAGR of 8.3%.

Financials and Valuation

Chime CEO Chris Britt said that the company has more than tripled its transaction volume and revenue during the pandemic and has become profitable on an EBITDA basis. Cornerstone Advisors and StrategyCorps estimate that 12 million U. S. consumers are now customers of online bank Chime as of February 2021.

Chime has raised $2.3B from investors, including Yuri Milner's DST Global, Tiger Global Management, ICONIQ, General Atlantic, Dragoneer, and hedge funds investing in public and private firms. Its Series G investment round in August 2021 raised $700M valuing the company at $5B ($69 price per share).

Risks

Chime is a leading digital bank, but it faces intense competition in the market. Chime's top competitors include SoFi, Moven, Varo Money, Cash App. Also, companies from other segments may foray into the digital banking market. Apple has launched its new iPhone-integrated credit card, registering 3 million credit cards within the first year.

Digital banking is relatively young, there is a risk that analysts and venture investors are overestimating the industry’s growth potential. Chime hasn’t disclosed its financial statements. It is unclear if it shows any tendency toward profitability.

Low liquidity: investing in private companies at the pre-IPO stage is an opportunity to make money over a few years. If you exit early, the price may be significantly different from the purchase price or the selling process may take more than 1 month.