German neobank N26 has raised a $300 million Series D funding round led by Venture Partners, with participation from GIC and other existing investors. This brings N26's funding to date to over $500 million and its valuation to $2.7 billion, making it the latest fintech unicorn, as well as one of the highest-valued fintechs in Europe.
Additionally, this is the largest funding round that has been secured by a European neobank, though Revolut is in talks to raise $500 million from SoftBank. N26 is live in 24 markets and has over 2.3 million customers.
N26 will use the funding to expand globally, starting with the US. The fresh capital will fuel the neobank's expansion plans, according to the press release, including its US launch, which is slated for the first half of 2019. Additionally, N26 wants to expand to Asia and South America, but it hasn't yet disclosed any specific countries of interest, reports The Financial Times.
N26 will likely have to spend big on these plans, as it will need to hire staff and compliance teams in all of these new markets, and this latest funding round will go a long way in supporting those efforts. Meanwhile, although it's not in the black yet, N26 is profitable on a per customer basis, according to The FT. This means that it likely won't have to use a large chunk of the funding to cover losses.
This latest round indicates strong investor confidence in N26's future success — and its geographic expansion.Many European neobanks are eyeing the US market, including Revolut and Monzo. However, very few players are looking at other markets, such as South America, for their global expansion, despite large portions of these consumers being financially underserved.
N26's intention to roll out its services in more countries likely played a role in securing such a large round from investors. This strategy will help the neobank to establish itself globally and ensure that it builds a sustainable business that can eventually become profitable.