Varo, a US neobank with a national bank charter, is looking to raise $50 million in capital at a 28% discount on its last valuation.
Varo Bank was last valued at $2.5 billion in September 2021 after raising $510 million in Series E financing.
According to a term sheet seen by Fintech Bussiness Weekly
, Warburg Pincus is said to be leading the new capital raise at a much lower valuation of $1.5 billion.
Founded in 2015 by former Wells Fargo executive Walsh, Varo became the first US consumer fintech firm to be granted a national bank charter in 2020, enabling the digital challenger to offer a full suite of FDIC-insured services.
The firm in July announced 75 job cuts
in an effort to limit expenses, which at the time were running at $80 million a quarter, far exceeding revenue.
In a message to staff, CEO Colin Walsh said the cuts - which represented about 10% of Varo's workforce - were needed to make sure the firm had sufficient capital to "execute on our strategy and path to profitability".
Varo reported net losses of $236.5 million last year.