Digital Bank Chime Readies IPO With Possible $40B Valuation

The digital banking service Chime has asked Goldman Sachs Group for assistance in prepping for an initial public offering that could value the company at close to $40 billion.

As Reuters reported Friday (Jan. 21) citing sources close to the matter, the FinTech will likely be valued at a high premium following its valuation of $25 billion in a $750 million funding round in August of 2021.

Chime was valued at $1.5 billion three years ago, so this powerhouse listing would highlight how the company has managed to competed with traditional banks, thanks to its checking accounts that come with payday advances and no overdraft fees.

The startup makes money by earning fees from payment processes like Visa every time a customer uses a Chime credit card or debit card. Chime has enjoyed strong growth during the COVID-19 outbreak as consumers moved towards digital banking.

Chime interviewed multiple banks before deciding to give Goldman the lead role in its IPO, but will add other banks to its line-up of underwriters ahead of the offering, which could arrive as early as the spring.

Founded in 2013 by current CEO Chris Britt and Chief Technology Officer Ryan King and based in Silicon Valley, Chime’s provides banking services through The Bancorp Bank and Stride Bank. The company says it has more than 13 million active users.

Read more: FinTech Challenger Bank Chime’s Claims of No Fees Hold up Under Scrutiny

Last year, Chime’s claims that it offered no overdraft fees or hidden fees came under the scrutiny of the National Advertising Division (NAD) of BBB National Programs.

The NAD ultimately found that Chime’s homepage contains the proper wording, but took issue with the size of the font that qualifies the “no fees” claim. The division also noted that Chime’s television commercials “could more clearly qualify the ‘no hidden fees’ claim.”

The NAD also recommend Chime edit its webpage and TV ads to make it clear that “no fees” does not apply to charges incurred from out-of-network ATMs. Chime has its own network of 60,000 ATMs customers can use without incurring any fees.