Aussie neobank Volt has raised $70 million in series C funding ahead of a planned IPO at the end of the year, as activity in the challenger bank sector heats up.
The round was significantly oversubscribed — originally Volt was seeking $60 million.
Yet, co-founder and chief Steve Weston tells StartupSmart it has already opened its Series D round, valuing the startup at $285 million.
It’s already gearing up to be a big year in the challenger bank space
Last week, 86 400 announced it is offering an energy price comparison and switching service for customers. Xinja has also announced its ‘Stash’ savings account product.
Volt was the first neobank to secure its full ADI license in January last year, however it wasn’t until almost 12 months later that it rolled out its first savings account beta product.
This latest funding will allow it to continue rolling out additional products, partly based on feedback from early customers, Weston says.
“We’re working really closely with them … taking their feedback, making refinements and then rolling that out to more customers,” he says.
“At some stage during February we will go through the complete waitlist, and then we will go into the public launch.”
Testing is also underway for Volt’s deposit products, a cash management account and transaction account, likely to launch in May.
In the past, Weston has taken the approach that Volt shouldn’t launch a product before its ready — unlike rival Xinja, Volt has waited to launch a beta, and hasn’t launched a pre-paid credit card product.
But, when it comes to the transaction account, it’s time to get something onto the market, he says.
“In terms of the transaction account, and all the things we want to do with all the bells and whistles, that will be a never-ending exercise, but when you do go to market you want something that’s not too minimum viable product.
But, the plan is to get something out and into testing.
“You can never wait until everything’s perfect, or you’ll never launch anything.”
Equally, Volt has a waiting list of some 44,000 willing guinea pigs, Weston says.
“The initial customers typically are more passionate, so they’re keener to give you feedback, but they’re also a little more forgiving,” he explains.
“They’re the people who have been with you through the journey and they want to help you succeed.”
Now, if all goes well and the market is receptive, Volt is headed for an IPO within the next 12 months.
By then, the plan is to have lending products in the market, Weston says, and so the bank will be producing net interest margin.
“We will be on the way to getting to break-even,” he says.
At the same time, Volt is already looking ahead to it’s Series D round.
“We haven’t had distinct raises,” he says.
“It’s more of an ongoing process. You may have distinct raises, or you may have points where you’ll close one raise off and start a new one, where you can justify a re-rating of the valuation.”
In this case, getting a product onto the market and starting to work through the waiting list was “new information” that justified an increase in valuation.
So, just like that, Series C is closed, and Series D opens up.
There’s been a need for “regulatory capital”, Weston says, in addition to the usual capital any business requires to reach a break-even point.
Getting the licence, recruiting people, and building a refining the technology “all required constant focus”, he says.
And there’s unlikely to be any let-up anytime soon.
“Sleep deprivation is a beautiful thing,” Weston says.
“When you’re doing something you’re so passionate about, and you know the impact it’s going to have on so many people, it’s not that hard to do.”
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