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As it braces for the financial atmosphere after the coronavirus pandemic passes, N26 has pulled in new funding and is eyeing the Brazilian market.
Popular digital bank N26 has announced that it has just raised $100 million in additional funding as it looks to a balanced 2020. The German company has now raised a total of $770 since its inception.
N26 is a German digital bank, with backing from Peter Thiel’s Valar Ventures and Chinese multinational conglomerate Tencent Holdings Ltd. It announced a Series D investment round earlier in 2019, with the recent funding serving as an extension to that.
Speaking to CNBC, CEO and co-founder Valentin Stalf considers the new round successful, because investors have generally been reluctant as they’ve suffered from the coronavirus pandemic. The CEO also says that the new N26 funding brings some optimism to the company.
“It makes us still one of the most highly-valued companies around Europe. It’s not only about where we are today at $3.5 billion, but where we are going to be in five to 10 years.”
Stalf goes on to say that the recent funding is simply an opportunity to raise money. He says that N26 has “always been a well-financed company” and is not running out of cash. He adds that the move is typical, as many other companies are looking into the near future, and trying to stay afloat.
“We just want to be very well-prepared and that’s why we decided to raise more capital now.”
The CEO says that N26 is planning for impact from the coronavirus pandemic, as he believes it might still stretch towards till the end of the year.
N26 Spreads with Funding
At the moment, according to Stalf, N26 has more than 5 million users. Back in February, N26 announced that it would pull out of the United Kingdom, because of Brexit. The company explained that it would no longer have a license to operate after Brexit, and advised customers to withdraw funds. This was especially uncomfortable for customers because the bank had only entered the UK market a few months before. Unsurprisingly, customers expressed their displeasure at the development.
N26 later apologized that it had to leave because it had no choice.
The bank has seen a drop in user growth beginning in March when a lockdown began across Europe. It has also seen its ATM withdrawals drop by 50%, even though e-commerce payments among older customers have increased.
N26 is looking at the Brazilian market. According to Stalf, Brazil could be a bigger opportunity for the company, than the UK is. Its recent funding could help the digital bank spread its tentacles properly into the South American market. N26 also launched in the U.S, last year and has pulled in more than 250,000 users there.
However, even with the funding, Stalf says N26 is “reviewing every cost line”. Moving forward, N26 will spend less on marketing, and has already begun using local guidelines for German and Austrian employees.