Starling Bank valued at £1.1 billion with £272 million funding round

By Sunniva Kolostyak

Starling Bank, the UK challenger bank, has raised £272 million in a Series D funding round at a £1.1 billion pre-money valuation – achieving unicorn status just months after turning a profit.

The investment round was led by Fidelity Management & Research Company (Fidelity), alongside Qatar Investment Authority (QIA), RPMI Railpen (Railpen), the investment manager for the £31 billion Railways Pension Scheme, and the global investment firm Millennium Management.

The funding will support Starling’s continued rapid growth, which has been profitable for the past four months. The capital will be deployed primarily to support a targeted expansion of Starling’s lending in the UK, but also to drive’s Starling’s expansion across Europe and for anticipated M&A.

Commenting, Anne Boden, founder and CEO of Starling Bank, said: “Digital banking has reached a tipping point. Customers now expect a fairer, smarter and more human alternative to the banks of the past and that is what we are giving them at Starling as we continue to grow and add new products and services.

“Our new investors will bring a wealth of experience as we enter the next stage of growth, while the continued support of our existing backers represents a huge vote of confidence,” she added

Rothschild & Co is acting as exclusive financial advisor with Norton Rose Fulbright acting as legal advisor to Starling Bank on the transaction. The transaction remains subject to regulatory approval.

Starling generated a total revenue of £12 million in January 2021, which represents an annualised revenue run rate of £145 million and an increase of approximately 400 per cent compared to January 2020.

Gross operating costs remain broadly flat with account numbers having almost doubled year-on-year to more than two million, and net income now exceeds £1.5 million per month. Deposits exceed £5.4 billion and total gross lending exceeds £2 billion.