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Varo bank raising $50 million at 28% discount

Varo bank raising $50 million at 28% discount

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.

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