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Digital banking startup Aspiration seeks new funding round
NEW YORK (Reuters) - Aspiration, a digital banking startup that allows customers to choose whether to pay fees, is embarking on its largest ever fundraising round, its chief executive, Andrei Cherny, told Reuters.
The Marina Del Rey, California-based company is seeking upwards of $200 million, which would value it at more than $1 billion, according to a person familiar with the fundraising plans. The final figure will depend on investor interest and will be formally set later, the person added.
Cherny declined to comment on the figure but confirmed the company was in talks with investors for a cash injection that would be “larger than anything we’ve done before.”
Founded in 2013 by Cherny and Joe Sanberg, the company markets itself as an ethical bank, offering socially conscious services and investments, ones that exclude businesses linked to the fossil fuels or firearms industries. It does not charge fees on ATM withdrawals or offer overdrafts.
It is part of a wave of young companies aiming to compete with traditional financial services providers through more efficient use of technology and better customer experience. So-called neo-banks, such as Aspiration and Chime in the United States, and N26 and Monzo in Europe, also hope to tap into consumer discontent with traditional banks.
Aspiration, which holds a broker dealer license and partners with banks, had last raised $47 million from investors including Social Impact Finance, Omidyar Network and Allen & Co in December 2017.
Other backers include actors Orlando Bloom and Leonardo DiCaprio and Capricorn Investment Group, the firm founded by eBay Inc’s first president, Jeff Skoll.
In February Aspiration launched a new product called “Spend & Save Account,” which offers 2 percent interest on deposits and gives customers extra rewards for spending at socially conscious businesses. Accounts are protected by the Federal Deposit Insurance Corporation for up to $250,000 per depositor, according to its website.
The company has more than 1 million customers and is adding around 100,000 users per month, Cherny said. Aspiration is not yet profitable, he added, while declining to disclose how much the company had amassed in deposits.
Cherny said the startup’s “Pay What is Fair” strategy had originally raised skepticism among investors, but that sentiment had changed as the company grew and most of its users opted to pay a fee.
“As we are talking to people. If anything, it’s become easier for investors to see what makes Aspiration special,” he said.
Reporting by David French and Anna Irrera.; Editing by Steve Orlofsky
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