Re-thinking Banking with N26: How a Challenger Became a Global Player
By Christian Nagel, Partner at Earlybird
What started as a pure vision of a bank tailored to the demands of the 21st century has become a strong and highly agile company, N26, with eight office locations and over 7m customers in 25 markets.
The concept of mobile banking keeps transforming — from initially small challengers to now full-fledged competitors of established banking systems. In this space, N26 plays a pivotal role.
Today we are exceptionally proud to announce the Series E round of N26. The Berlin-based mobile bank received another $900+ million of funding to further expand its mobile banking offering.
The round was led by Third Point Ventures and Coatue Management with participation from Dragoneer Investment Group as well as N26’s existing investors, including Earlybird. This is the second largest round for a FinTech in Europe, after Klarna. Additionally, with the newly raised capital, N26 now overtakes the market cap of Commerzbank, thus becoming the second largest German bank.
At Earlybird, we’re grateful to be a part of the N26 journey, serving as the very first point of contact with the two founders. We’re proud to have invested in them since the beginning and continue our support.
Beginnings
Their inspiring journey started eight years ago when longtime friends, Valentin Stalf and Maximilian Tayenthal, founded the company. Initially, during their first brainstorming sessions in Vienna, the concept was to create a credit card for children and teenagers to manage their pocket money. However, during their beta test phase, more and more parents of the children who were testing the card became interested in using the product as well. This opportunity gave the founding team the courage to pursue a much broader idea, pivoting their business model towards a mobile bank accessible for everyone from everywhere.
Banking for everyone
I met the founders for the first time at ‘Capital On Stage’. At that event, pitching roles were switched. Instead of the typical format of startup pitch battles, the VCs were the ones on stage and pitching to founders. After my presentation, they approached me and explained their initial idea. At that time, they called the company “Papayer — Teen Payment”. When we met next it was at an Axel Springer Plug and Play event, where I encouraged them towards a banking for everyone approach. By the beginning of 2014, they had pivoted their company to a much broader audience. This led us to the decision to invest in their pre-seed round that year and we’ve remained in close contact since then.
David and Goliath
The N26 journey resembles a modern telling of the Biblical story of David and Goliath — where a brave and ambitious challenger takes on the world of multiple legacy financial institutions. A young and agile team was able to re-think banking as a whole, creating a mobile approach perfectly suited for the 21st century. But fitting in isn’t always easy. It’s worth noting something clearly: the regulatory scrutiny coming in N26’s direction offers an opportunity for ecosystems and established systems to work together in support of innovation in the fintech space. I believe there are areas of regulation which may need to find ways to evolve. As corona-era lockdown restrictions lift widely, transaction volumes continue to increase dramatically. This again has further accelerated the growth of N26’s business. And this new round will be used to fuel the expansion even further.
Pioneering Change
N26 has transformed from a small challenger to a main player, now on eye-level with many financial institutions. N26 has become a competitor, a pioneer and an agent for future change. The company presently operates offices in Berlin, Barcelona, Madrid, Milan, Paris, Vienna, New York and São Paulo. It has a diverse employee base with more than 1.500 employees consisting of 80 different nationalities serving over 7m customers in 25 markets.
All of this has been achieved without a single physical branch. N26 enables you to open an account just with a few clicks and directly start using it, even before your credit card is delivered.
We are proud to back ambitious challengers of the status quo and are excited for N26’s next milestones on their compelling journey.
