London fintech Curve is in the market to raise between £100m and £120m in its Series C round, multiple sources familiar with the deal have told Sifted.
The startup, which allows customers to integrate multiple bank accounts into one smart card, began the hunt for funds earlier this year, said those same people. Curve declined to comment.
If successful, Curve will boast one of the biggest European fintech raises of the lockdown period — trumped only by Checkout's $150m raise in June.
However, Curve's fundraise is not expected to give it a unicorn valuation ($1bn), having previously raised at $250m in its Series B last July.
Curve will use the new funds to focus on propelling the fintech's international expansion, one of the sources with direct knowledge of the deal told Sifted.
The fintech, which began operating in the UK in 2018, has slowly begun to roll out in France, Germany, Italy, Poland, Portugal and Spain. Meanwhile, it opened a small office in the US but there is no known timeline for its customer launch there.
Business model to the test
Curve's new investors will be hoping the company can now double down on new revenue channels.
Currently, Curve makes money from a small interchange fee when a customer uses their card, and from a subscription fee for its premium offering.
Nonetheless, a report last year by Business Insider questioned how many of Curve's 500,000 customers were actively using their card, estimating it could be as low as 14%. When approached by Sifted in the aftermath, the company declined to comment on its 'monthly active users' stats.
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The lockdown and decline in retail spending will also have dampened user activity — worsened further by a brief suspension in operations last month at the hands of the Wirecard chaos.
Meanwhile, Curve's premium offering has been criticised for only appealing to a limited audience of elite, frequent travellers with card-jammed wallets.
Still, the fintech's biggest value proposition could arise from the data it collects from aggregating users' cards.
The company also announced a B2B-style partnership last month, partnering with Samsung Pay to power the phone provider's efforts to get up to date with Apple and Google Pay.
A £120m fundraise would put Curve on a similar funding roadmap to digital bank Revolut, which raised a $250m Series C in 2017. By comparison, Monzo raised a £19.5m Series C round.
But, in an interview with Sifted last year, Curve's chief executive Shachar Bialick suggested the company can manage with far less funding, hinting at being more cost-efficient than his fintech peers.
He argued that digital banks "need a lot of money to challenge [the incumbent] banks, because you need to spend a lot of money to acquire customers," whereas "you need a bit less money just to build a new category on top of them. We don’t need all the regulatory compliance that [challenger banks] need."
- Read here for the biggest fintech raises of 2019
The change in funding strategy may have been triggered by the uncertainty of coronavirus, which has dampened investor appetite in the UK.
Investment into UK fintechs in the first half of 2020 was down 39% year-on-year.
Bialick may therefore be looking to boost Curve's war chest prematurely; hedging against any future retreat in capital and safeguarding Curve's ambition to become the "Spotify of banking".