19 January 2021

Fintech Start-Up Curve Raises $95 Million to Bring Its ‘Smart’ Payment Card to the U.S.

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LONDON — British financial technology firm Curve announced Tuesday that it’s raised $95 million to fuel an expansion into the United States.

Founded in 2015, Curve is among a flood of upstarts in Europe that have gained a following among mainly younger consumers in the last few years thanks to their online-only banking services.

Unlike digital challenger banks such as Revolut and Monzo, which offer checking accounts via an app, Curve combines all of a customer’s debit and credit cards into one platform and a linked “smart” card they can use for payments. The firm’s app has a feature called “Go Back in Time” that lets users change the account they paid with after making a transaction.

Curve’s latest funding round, its Series C, was led by IDC Ventures, Fuel Venture Capital and Vulcan Capital, the investment house of late Microsoft co-founder Paul Allen. American lender OneMain Financial and Novum Capital also invested.

“Despite the challenges Covid created for many businesses, we’ve seen great growth and are delivering on many of our targets,” Curve CEO and founder Shachar Bialick told CNBC in an interview.

Last year was a tumultuous time for some fintech firms. Monzo, for example, warned that disruption from the Covid-19 crisis had led to “significant doubt” about its ability to continue “as a going concern.” Many fintechs are now under pressure to show they can become profitable, and some experts think the sector could be ripe for consolidation.

Bialick said that Curve was less affected by the pandemic than its challenger bank rivals. Curve hasn’t disclosed its 2020 financials though. The company’s pre-tax losses quadrupled to £28.5 million ($38.7 million) in 2019, while revenues doubled to £5.9 million. Curve was late to submit its 2019 accounts, which were published Monday evening.

Curve was also hit last year by the fallout from the collapse of disgraced German payment company Wirecard. Curve customers were briefly unable to access their accounts in June after Britain’s financial watchdog froze Wirecard’s operations. The company had to shift its payments processing from Wirecard to rival firm Checkout.com.

U.S. expansion plans 

Curve said it would use the fresh cash to roll out its service in the U.S., following in the footsteps of several European neobanks, including N26, Monzo and Revolut, that have attempted to take on America to varying degrees of success. Over 8,000 Americans have signed up to a waitlist for Curve’s U.S. launch so far.

It’s a competitive retail banking market, home to massive incumbents like JPMorgan, Citigroup and Bank of America as well as thousands of smaller community banks. Bialick says his firm is uniquely positioned as an “over-the-top” banking platform aggregating several accounts, rather than a standalone digital bank.

“We’re very differently positioned,” Curve’s boss said. “Americans have seven to eight cards on average, they love rewards.”

“If you look at the number of banks in the U.S., you’ll find thousands of banks from small countryside city banks, to major banks like Bank of America and Chase. The fragmentation in the market is remarkable.”

Curve said it would also publicly launch a credit feature soon that lets customers split their purchases across a number of installments, similar to so-called “buy now, pay later” services from the likes of Klarna, Afterpay and Affirm. Curve is hoping that new product offerings like consumer finance and a new card launched with tech giant Samsung will help it bring in more revenue going forward.

The start-up has been the subject of controversy over the past few years. A Business Insider report in 2019 said Curve failed to disclose to crowdfunding investors that just 14% of customers used its app once a month or more.

Curve today says it has a total 2 million customers, though it’s not clear how many of those are active users. Its latest results revealed that monthly active users had climbed 346% in 2019, but Curve declined to disclose its monthly active user number.

“Like many other companies in our industry, we do not disclose commercially sensitive information,” a Curve spokesperson told CNBC. “What we can say is that we have amongst the strongest retention and engagement metrics in the market.”

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