Varo’s Recent Fundraising Efforts: A Look at Fintech’s Journey
Overview of Varo’s Fundraising Initiatives
Fintech pioneer Varo set out with the goal of raising $55 million in its latest funding round. However, it has only managed to secure $29 million to date, as reported in a recent SEC filing.
A History of Funding and Growth
Since its establishment in 2015, Varo has attracted over $1 billion in funding. Despite this impressive total, the fintech has faced challenges with its fundraising goals. Prominent voices in the fintech community, including Jason Mikula and Crowdfund Insider, have reported on these developments this week (here and here).
Challenges in Fundraising
This is not the first occurrence of Varo struggling to meet its fundraising expectations. In 2023, the company raised a funding round of $50 million at a post-money valuation of $1.85 billion, significantly lower than the $2.5 billion valuation reached during its prior $510 million Series E round in 2021.
Leadership Changes Amidst Growth
In a surprising turn of events, Varo’s CEO and founder Colin Walsh announced his resignation, with Gavin Michael stepping in as CEO. Michael, who previously served as CEO of Bakkt, officially took over in November 2024 after a period of collaboration with Walsh.
Company’s Future and Strategy
When questioned about rumors of Walsh’s forced resignation, a company spokesperson denied these claims, asserting that the leadership transition is part of Varo’s evolution. Michael’s extensive experience with major financial institutions is seen as crucial for the next phase of Varo’s growth strategy.
Walsh’s Continued Influence
Despite stepping down, Walsh will remain on Varo’s Board of Directors and retains a significant stake in the company. He has maintained a strong belief in Michael’s ability to build upon the foundations established during his tenure, particularly Varo’s commitment to financial inclusion.
The Road Ahead for Varo
Varo achieved a significant milestone in 2020 by obtaining its national bank charter, becoming the first all-digital consumer bank in America. Although Walsh previously indicated ongoing customer growth and a clear path to profitability, as of early 2024, the company had not yet reached profitability and reported a significant loss of nearly $65 million in December 2024.
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