Thiel-Backed Fintech N26 Valued at $2.7 Billion to Take on U.S.

(Bloomberg) -- N26 GmbH, the German banking app that’s backed by billionaires Peter Thiel and Li Ka-shing, has raised new funds at a valuation of $2.7 billion, making the company one of Europe’s most valuable non-listed fintech startups.

N26 received $300 million from Insight Venture Partners, Singapore’s sovereign wealth fund GIC and several existing investors, the Berlin-based company said Thursday. Its new valuation puts it ahead of rival Revolut Ltd. valued last year at $1.7 billion, and Swedish payment firm Klarna Bank AB, which was valued at $2.5 billion in 2015.

N26 is among a growing number of fintechs that focus on putting services on smartphones to grab customers from traditional banks. The latest funding will arm N26 with cash for its most ambitious plan yet -- a push into the U.S. to snatch clients from the likes of JPMorgan Chase & Co. and Bank of America Corp.

The German company is entering an increasingly crowded market for online-only banks in the U.S. Large, traditional banks such as JPMorgan and Citigroup Inc. have touted new mobile-only banking efforts as a way to combat similar offerings from startups.

“Insight Venture and GIC are great partners to take on retail banking in the U.S.,” N26 Chief Executive Officer Valentin Stalf said in an interview. “We’re confident we can reach the first million customers in the U.S. within the first 12 to 24 months.”

N26 said it has more than 2.3 million customers across 24 markets in Europe and claims to be one of the region’s fastest growing banks. It expanded into the U.K., Denmark, Norway, Poland and Sweden last year and has in the past targeted to win 5 million customers by the end of 2020. Stalf said he expects to reach that goal "much earlier" given last year’s growth.

The company will also open two more offices in Europe and seek to about double staff from the current 700 this year, Stalf said. The company will invest in technologies such as artificial intelligence. While an IPO isn’t in the cards for N26 in the coming year, Stalf said he’s open to look at that option afterward.

Started in 2013, N26 has raised more than half a billion dollars from investors including German insurer Allianz SE, China’s Tencent Holdings Ltd., Li’s Horizons Ventures and Thiel’s Valar Ventures.

N26 will work with a U.S. banking partner to start its offering there in the first half of this year. The company is confident it can win clients because large U.S. banks have trouble digitizing their products, Stalf said.

To contact the reporter on this story: Stefan Nicola in Berlin at snicola2@bloomberg.net

To contact the editors responsible for this story: Giles Turner at gturner35@bloomberg.net, Molly Schuetz

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