The UK-based neobank closed its Series D funding round by raising £272 million ($375.8 million), bringing its new valuation to £1.37 billion ($1.89 billion), per TechCrunch. It plans to use the money to expand into other parts of Europe, make strategic acquisitions, and grow its lending operations in the UK.
In addition to its funding raise, Starling announced that its business accounts have more than quadrupled since 2019. As of yesterday’s funding announcement, it totaled 300,000 business accounts, up from 74,000 in 2019. The significant growth came on the back of its participation in the Coronavirus Business Interruption and Bounce Back Loan Schemes, which allowed it to provide government-backed loans to struggling businesses and increase its customer base: It had issued £1.4 billion ($1.93 billion) in loans under the latter program as of last month, for example.
Starling could use the new capital to fortify its small business analytics offering and expand its business marketplace.
The neobank’s expected growth path and continued profitability hinge on its ability to retain the customers it onboarded during the pandemic. Starling had reported four consecutive months of profitability through January 2021, with net income exceeding £1.5 million ($2.1 million) per month. Revolut and Monzo have also rolled out their own SMB solutions. To be successful in its plan to nearly quintuple its share of the UK SMB market over the next five years while maintaining profitability, Starling will need to expand its offering to become a central hub for small business operations in the UK—and avoid bleeding customers to its digital and incumbent competitors.