Atom Bank has become the latest challenger bank to raise a funding round (recently closing on a £50 million round) with participation from a major banking player (BBVA in this case) following Monese, whose 2018 funding round included investment from fintech giant PayPal.
This points to financial institutions and established corporates in the banking and payments space increasingly becoming an alternative to traditional VCs as a funding source for early stage fintech companies.
Taking investment from corporate investors in the same sector involves negotiation points that founders may not have encountered on investments from VCs and they should be wary of giving up flexibility on future exit routes or allowing inappropriate access to the company's confidential information.
Another hopeful among Europe’s so-called challenger banks — startups taking on the big names in consumer banking by targeting niche groups of users with a more modern set of tools to manage users’ money — has raised a sizeable round of funding to expand its business. Atom Bank — which targets mainly millennial-aged consumers (current slogan: “It’s all about you, you, you”) with mobile-first savings accounts and mortgages as well as small business loans — has raised a further £50 million in funding.