Banking startup N26 raises another $170 million at $3.5 billion valuation

Fintech startup N26 is raising $170 million a few months after raising $300 million. While it’s technically structured as a new round, the company considers today’s new funding as an extension of the Series D round.

N26 has only reached out to existing investors. All the investors in the Series D round are investing again, as well as a few investors that have been around for a while. So that’s Insight Venture Partners, GIC (Singapore’s sovereign wealth fund), Tencent, Allianz X, Peter Thiel’s Valar Ventures, Earlybird Venture Capital and Greyhound Capital.

“It’s a raise in valuation of about 30%. It’s only existing investors that participated. We didn’t go external as it is also quite quickly after the round that we did earlier this year,” co-founder and CEO Valentin Stalf told me. “But I think it’s a good testament of the development of the company over the last couple of months.”

With this new influx of funding, N26 has now reached a post-money valuation of $3.5 billion. The company has raised $670 million in total. And N26 says that it is now the highest valued German startup and one of the highest valued fintech startups in the world.

N26 has been building a retail bank that works better. The company lets you sign up from your phone, get a card that you can control from your phone and make purchases all around the world without any foreign transaction fee. And the company has managed to attract 3.5 million customers all around Europe.

More recently, N26 launched its challenger bank in the U.S. The company plans to expand to Brazil in the coming months and launch more products to make it easier to manage your money. Many features will be based on Spaces, which are sub-accounts that let you separate your money in multiple pools and eventually share Spaces with other people.

I chatted with N26 co-founder and CEO Valentin Stalf about the future of N26. Here’s our interview, which was edited for clarity and brevity.

TechCrunch: You announced N26 You already. What’s the idea behind it?

Valentin Stalf: We launched it yesterday or the day before yesterday. There are different card colors and we’re differentiating our premium tier [N26 Metal] a little bit more from the mid tier [N26 You]. I think it was a little bit similar.

But now, N26 You is more individual. And then it’ll come together in a couple of weeks when we launch additional cards for one account. You can have different colors. And then, with Spaces, I think we’re trying to build the most flexible bank account to live and think your way.

And then, in the next quarter we’ll do an app update with a transaction-based timeline.

TC: Does it mean that because of the new colors, people will get multiple cards and attach one card to one Space for instance?

Stalf: In the end, you’ll be able to attach the cards freely to different Spaces. It’s not even that important that you attach one card to one Space. Sometimes, people want to have multiple cards. But if you only use one card, then you can swap a transaction to a different Space.

TC: Now that you’re bringing perks from N26 Metal to N26 You, what does it mean for Metal customers? Do you just get a different card?

Stalf: I think with Metal, we’ll go more and more in the premium direction.

We also mentioned that we’ll be relaunching our insurance packages. The new package will be based on traveling but also mobility. You’ll have a lot of things in the mobility space including scooter riding.

TC: Let’s talk about product. You talked about Shared Spaces and multiple cards. There’s a redesign that is coming out in the next few months, what will it look like?

Stalf: With the app update that we’re doing, it’s not just a design update of the front end, it’s really an update of the way we talk to our customers and how we present transactions. We’ll be changing what you see in the app timeline.

We want to give you more context and we cant to make it smarter. We’ll integrate customer support interactions, we’ll integrate transactions that didn’t work… These features will launch over time.

We’re launching the infrastructure and then we’re launching each of the features. For instance, you’ll have the opportunity to start a customer service interaction directly from a transaction, straight to live chat.

And it’s coming together with Shared Spaces. It’s also something that needs to be reflected in the timeline in a smart way. Some of the transactions that might show up in your timeline might not be done by yourself but maybe by someone else.

Depending on which transaction you do, we move more details into the timeline directly based on what we think is important. So let’s say it’s a transaction in a new country, you might want to see the exchange rate in the timeline directly. If it’s rent, sending the same amount every month, you don’t need to see more details. It just needs to say rent — okay fine.

TC: What did you promise when you raised some more money? New countries, user numbers, improved monthly transaction volume?

Stalf: We have an opportunity that we build a bank that has more than 50 million users around the globe. Today, we only have 3.5 million users but we’re accelerating.

From a country perspective, we have agreed already that we go to Brazil. There’s no plan after Brazil yet. Now let’s focus on the U.S., then on Brazil, then next year we’ll find out what’s the feedback from these two markets.