The funding, led by DST Global, is the largest individual equity investment for a challenger bank, surpassing NuBank’s $400 million, which was also led by DST Global, according to CB Insights.
DST Global led the Chime’s previous funding round that closed in March, which valued the digital bank startup at about $1.5 billion.
The anonymous source told CNBC that Chime’s CEO and Co-founder Chris Britt is planning to earmark the funds for product development and new hires. A second office is slated for Chicago and by the end of 2020, the company expects to more than double its staff. It is also contemplating the purchase of other FinTech firms, the source said.
Chime’s account base is 6.5 million, up from 1 million last year. The branchless bank offers no-fee accounts and free overdrafts and goes after customers who are dissatisfied with traditional banks.
The startup’s valuation is about 20 times its revenue, which is estimated at $300 million this year. Revenue is primarily generated by debit card fees and it breaks even on most customers in less than a year, the sources said.
Chime attracts about 150,000 direct deposit users a month, which features early delivery of paychecks and other perks.
Chime’s rapid growth is happening as competition in the digital banking market widens. Numerous consumer FinTechs have started offering bank accounts in the past year. In addition, Google and Uber are adding financial services and overseas digital banks like Monzo and N26 are launching in the U.S.
Britt co-founded Chime in 2014 with Ryan King, who serves as chief technology officer. The two set out to start a web bank that offered middle-class consumers a good deal. Chime also offers tools that are particularly appealing to younger banking customers, such as automatic savings pushes that instantly round up purchases to the next dollar.