Ushering in a New Era of Online Banking: Why Sapphire Ventures is Excited to Partner with Current
“When I look for investors, I look for real business partners—those who I feel have shown a genuine interest in our business from the very first conversation, and will be there for the long-haul. Kevin and the Sapphire team have stayed close to us since we were a fraction of the size we are today, helping us shape the business as we’ve continued to build the future of banking. We are incredibly excited about working with them.” -- Stuart Sopp, Founder and CEO of Current
There is a commonly used adage that the 50 largest banks are worth over $50 billion. The number is actually closer to about 41 of the world’s largest banks1 that have a market cap of more than $50 billion (10 in the U.S.), still making the global banking industry massive. For an industry so large, there’s been a lack of innovation and significant disruption in the space until recently. What we’re seeing today are outdated solutions and brands being replaced by a new generation of no-fee, mobile-first, branchless online banks.
That is why Sapphire Ventures couldn’t be more excited to announce our investment in Current’s $131 million Series C2 funding round. We strive to help entrepreneurs build Companies of Consequence, and we believe that CEO Stuart Sopp and his team are doing just that for banking, one of the world’s largest markets.
Current, a rapidly growing challenger bank founded in 2015, is poised to upend a multi-trillion dollar market by providing accessible and affordable banking to the next generation of consumers. After meeting countless startups in the broader online banking space, we immediately gravitated to Stuart’s drive and maniacally product-first vision, as well as the most compelling unit economics we have seen in the industry.
Here’s more on why we’re looking forward to partnering with Current:
A rapidly growing sector with a solution for everyone
The global banking industry as a whole represents a massive market opportunity worth trillions of dollars. Within this vast market, we’re especially interested in online banks, which are booming amid a generational shift. The digital bank startup industry was worth more than $20 billion in 2019 and is projected to reach $471 billion by 20273.
Current provides premium banking services for everyone, regardless of age or income. But the company started out by first targeting Millennial and Gen Z consumers who are driving the shift towards mobile-first solutions that offer digitally-native features with brands that are different than the ones their parents used. Data shows that a whopping 92% of millennials4 say they would choose a bank for its digital services. Furthermore, younger customers have a high distrust of traditional financial institutions, whose reputations have suffered due to high-profile scandals and hefty fees for banking services.
Current is also seeing a strong following with essential workers, and ethnically and economically overlooked populations5 who have found in Current a solution that works specifically for them. The company’s goal is to lower the barriers to financial inclusion, something traditional banks are not set up to provide.
A next-generation, digital-first bank that stands out
Current, a branchless, mobile-first bank based in New York, has gained incredible traction in the online banking world. The company offers checking accounts featuring faster direct deposits, free overdraft up to $100, a points system for cash back, instant refunds on gas holds and more, all without any hidden or overdraft fees or minimum balance requirements.
Current derives revenue primarily from the fees merchants pay when users swipe their cards, which means its growth potential directly correlates with the rising spending power of consumers as they continue to grow in life.
One of the most impressive aspects of this success has been how Current has done it, matching their strong growth with equally impressive unit economics, something we rarely see in the challenger bank space. Current has achieved this by offering a solution people actually want and by building a cloud-native and horizontally scalable technology stack that brings core pieces of banking infrastructure in-house, resulting in meaningful cost savings that can be passed onto its users.
A visionary leader with strong industry experience
Founder and CEO Stuart Sopp brings with him a deep expertise in the banking industry, including as Head of Trading at Morgan Stanley and Citi. He is product focused and puts the consumer experience first in every circumstance. With a personality that will control any room and a strong team behind him, including executives from Zynga, Topps, Paypal, BlueVine and others, we feel that Stuart is well-positioned to change the banking space forever.
We’re excited to have Current join a long list of Sapphire portfolio companies in the fintech space, including AvidXchange, Currencycloud, Feedzai, IEX, OnDeck, Square and TransferWise. The investment also fits within our slate of consumer-focused companies, such as 23&Me, Cazoo, Fitbit, LinkedIn and Sun Basket. We look forward to partnering with Current as it reimagines banking with consumers’ best interests in mind!
Disclaimer: Nothing presented within this article is intended to constitute investment advice, and under no circumstances should any information provided herein be used or considered as an offer to sell or a solicitation of an offer to buy an interest in any investment fund managed by Sapphire Ventures (“Sapphire”). Information provided reflects Sapphires’ views as of a time, whereby such views are subject to change at any point and Sapphire shall not be obligated to provide notice of any change. Companies mentioned in this article are a representative sample of portfolio companies in which Sapphire has invested in which the author believes such companies fit the objective criteria stated in commentary, which do not reflect all investments made by Sapphire. A complete alphabetical list of Sapphire’s investments made by its direct growth and sports investing strategies is available here. No assumptions should be made that investments listed above were or will be profitable. Due to various risks and uncertainties, actual events, results or the actual experience may differ materially from those reflected or contemplated in these statements. Nothing contained in this article may be relied upon as a guarantee or assurance as to the future success of any particular company. Past performance is not indicative of future results.