Banking startup N26 raises $300 million at $2.7 billion valuation

Fintech startup N26 is raising a Series D round of $300 million. Following this new funding round, the company is now valued at $2.7 billion. Insight Venture Partners is leading the round with Singapore’s sovereign wealth fund GIC and a few existing investors also participating.

N26 is building a retail bank from scratch. The company lets you open a bank account and get a card in just a few minutes. You can then control everything from your phone or computer. And it’s a much better user experience compared to traditional banks.

This round comes as a surprise as the startup announced a $160 million funding round ten months ago. I talked with N26 co-founder and CEO Valentin Stalf about this, and there are several reasons why raising money made sense.

First, N26 is a very different company now compared to early 2018. The user base has tripled and people are using their N26 accounts more and more. Around a third of N26’s customers are paying every month for a premium account.

The startup’s valuation has exploded as well. “The previous valuation was below $1 billion,” Stalf told me. In other words, N26 is in great shape and it made sense to grab more money before expanding to new markets around the world.

N26 is currently live in 24 European markets and has 2.3 million customers. The company plans to expand to the U.S. in the coming months as well as other markets around the world. Customers currently hold €1 billion in N26 accounts overall. And the company has processed €20 billion in transaction volume since its creation.

I interviewed Valentin Stalf about today’s funding round. This interview has been slightly edited for brevity and clarity.

TechCrunch: Your list of investors is becoming more and more global. Does it mean that, in addition to the U.S., we can expect other countries and other regions as well?

Valentin Stalf: Absolutely. Our goal now for the next couple of years is to transform N26 from being a European company to being a global company. We started in Germany and Austria as you know. We’re now in 24 markets including the U.K. where we’re offering our product in a different currency.

And now the next step will be the U.S. in 2019. We would like to bring N26 to four to six new markets outside of the U.S. and Europe in the next couple of years. But this year is really about the U.S. and then by the end of the year one more market or a couple of markets probably. But we see the opportunity to take the business global. And that’s also what everybody who invested in this round signed up for.

TC: It’s the first time you’re sharing the valuation, which is quite high. Does it mean that the financials of the company are looking good? Are you making money and from what?

Stalf: Two things led to the success of this funding round. One is tremendous growth. We’ve more than tripled the number of customers in the last year. Globally, I think we’re the fastest growing mobile bank on the market now. It’s one driver of the valuation — the future potential that there are many more customers searching for a banking alternative.

We’ve also worked on the profitability of our company. We’re definitely today the most advanced player on the market in terms of profitability per customer. Obviously, we’ll be consuming cash in 2019 — that’s why we raised a round to invest in new markets. But if you look at our company on a per-customer basis, we’re profitable on a per-customer basis. And I think it’s very important.

Where is the revenue coming from today? We’re very much focused on the daily usage of our product. So one is really from card transactions and the interchange fee. Second is our subscription model. Depending on the market, up to 32 to 35 percent are choosing one of the premium products that we’re offering — it’s a really important revenue driver. And then you have the daily usage of financial products, such as overdraft, savings and consumer credit and these things that we have on the German market, the French market. We’re bringing that now to the U.K. and other markets.

TC: On the product front, are there other products that you’re going to roll out or are you more focused on launching the entire lineup of products across all your markets?

Stalf: I think we want to internationalize existing products to new markets and bring our financial products that we have to more of the markets that we’re in.

But I think the strong focus that we have in order to internationalize is really to innovate more on the product. We’ve launched Spaces before Christmas — I would say version one. The big update that is coming out in the next two months is really about sharing a space, creating a shared account either long term with your partner or short term with friends.

We’ll add much more functionality to Spaces. We’ll be adding virtual cards that you can add per account. We’ll be adding different account numbers.

TC: Let’s go back to the funding round. You’ve raised $160 million a year ago — it’s quite quick. If I read that correctly, does it mean that you’re thinking that competition is fierce or that you should get a war chest in case there’s an economic downturn?

Stalf: I wouldn’t call it an economic downturn, but if you look at the equity market, obviously valuations have been challenged over the last couple of weeks. And I think we were lucky in terms of when we raised funding. I think it was good timing.

Independent of that, we’ve never raised because of any timing thing or so. Our company managed to do incredibly well in the last year in terms of profitability and growth. And we’ve had a lot of people approaching us, we’re always in contact with different investors. I always think the best time to raise is when you don’t need to raise. GIC and Insight are the best investors we could have thought of.

TC: Let’s talk about the future. Now, that you’ve got a ton of funding in your bank account. How do you see N26 in a couple of years as a product, as a company and as a brand?

Stalf: I think we have the opportunity to really build a business with a hundred million customers globally. I truly believe in this. And that means that we’ll have to build the brand that you need for such as business. It’s going to be a big focus.

If you look more at our company, we have now 700 employees in three locations around the world — Berlin, Barcelona and New York. We will open a couple of offices throughout the next year in Europe and maybe somewhere else in the world. So it's really awesome to transform our company to be more global — we already have 50 different nationalities.

The world’s first foldable phone is real

People have been talking about foldable smartphones for years, but it’s finally happening. Chinese company Royole was showing off the FlexPai at CES in Las Vegas, and we got to play with it for a few minutes.

It’s hard to say if it’s a phone or a tablet as you can basically use it as a phone and a small tablet. Arguably, the tablet form factor is the most usable one. It’s a 7.8-inch device that runs Android.

When you fold the AMOLED display, there’s still a small gap between the two halves of the screen. But it’s also much smaller than the unfolded version. It’s a bulky phone, but it’s still much easier to store in a purse compared to a tablet.

You can already buy a developer version of the device if you live in the U.S. for around $1,300. It runs Android with a bunch of custom software features. If you fold the device, all your content moves to one part of the screen. It’s not a fluid experience, but it works.

It’s impressive to see that Royole managed to beat Samsung and other manufacturers to the market with this technology. Now, let’s see if Royole will sell its own devices, partner with other manufacturers or both. We have a video of the device coming up later this week.

Watch LG’s CES press conference live right here

LG is opening the show with its CES press conference. Many consumer electronics companies are going to show us their new and shiny products all day long. And LG is starting at 8 AM Pacific, 11 AM Eastern, 2 PM in London.

You can expect new TVs (4K? 8K? The sky is the limit), more info on that funny beer machine and maybe a few surprises. Check out our full CES coverage.

Ledger announces next-generation cryptocurrency hardware wallet

French startup Ledger unveiled its new hardware wallet to manage your cryptocurrencies. The Ledger Nano X is a Bluetooth-enabled wallet, which means that you’ll be able to send and receive tokens from your phone.

The previous version of the device required you to plug the key to your computer using a microUSB cable in order to execute an order. Switching to Bluetooth and opening it up to smartphones is the next logical step.

Ledger is going to launch a full-fledged mobile app called Ledger Live. You’ll find the same features as the ones in the desktop app. You’ll be able to install new apps, check your balances and manage transactions.

The app will be available on January 28th and existing Ledger users will be able to check their balances in read-only mode thanks to public addresses (in case you’re not using Spot). Ledger has sold 1.5 million Ledger Nano S so far. And it sounds like other companies will be able to build mobile apps that work with your Nano X.

The Nano X looks more or less like the Nano S. It’s a USB key-shaped device with a screen and a couple of buttons. The screen is now slightly bigger.

One of the main issues with the Nano S is that you were limited to 18 different cryptocurrencies. You can now store up to 100 different crypto assets on the Nano X — the device supports 1,100 different tokens overall.

Just like other Ledger devices, the private keys never leave your Ledger wallet. It means that even if your computer or mobile phone get hacked, hackers won’t be able to grab your crypto assets.

The company is presenting the new device at CES, I’ll try to play with it to see how it works when it comes to pairing, battery life, etc.

LG’s capsule-based beer maker will test your patience

LG unveiled the LG HomeBrew a few weeks ahead of CES. I’ve seen the device today, and it looks like a gigantic, inconvenient machine.

It’s hard to grasp the size of the device based on photos, but it’s as big as a full-size espresso machine. You’ll need a big counter in your kitchen. But that’s not the issue.

The system uses a set of capsules. There’s a big tube-shaped malt capsule and three tiny Nespresso-shaped capsules for yeast, hop oil and flavoring. All these capsules come in a single box every time you want to start a new batch. But the capsules are not the issue either.

The main issue is that it takes two weeks to brew your beer once you’ve started the process. At the end, you get 5 liters of beer, or around 10 pints. Once you’re done, you need to replace the capsules and wait another two weeks.

Unlike traditional home brewing methods, you can’t start another batch while the machine is still brewing. So you’ll be out of beer quite regularly. Sure, you can buy two machines. Maybe LG should have designed a rackable system so that you can stack them up. But that defeats the purpose of an all-in-once, self-cleaning machine.

It’s unclear how much the machine and capsules are going to cost and if beer tastes any good. We couldn’t try the beer. There will be five different tastes — American IPA, American Pale Ale, English Stout, Belgian-style Witbier and Czech Pilsner.

The year social networks were no longer social

The term “social network” has become a meaningless association of words. Pair those two words and it becomes a tech category, the equivalent of a single term to define a group of products.

But are social networks even social anymore? If you have a feeling of tech fatigue when you open the Facebook app, you’re not alone. Watching distant cousins fight about politics in a comment thread is no longer fun.

Chances are you have dozens, hundreds or maybe thousands of friends and followers across multiple platforms. But those crowded places have never felt so empty.

It doesn’t mean that you should move to the woods and talk with animals. And Facebook, Twitter or LinkedIn won’t collapse overnight. They have intrinsic value with other features — social graphs, digital CVs, organizing events…

But the concept of wide networks of social ties with an element of broadcasting is dead.

From interest-based communities to your lousy neighbor

If you’ve been active on the web for long enough, you may have fond memories of internet forums. Maybe you were a fan of video games, Harry Potter or painting.

Fragmentation was key. You could be active on multiple forums and you didn’t have to mention your other passions. Over time, you’d see the same names come up again and again on your favorite forum. You’d create your own running jokes, discover things together, laugh, cry and feel something.

When I was a teenager, I was active on multiple forums. I remember posting thousands of messages a year and getting to know new people. It felt like hanging out with a welcoming group of friends because you shared the same passions.

It wasn’t just fake internet relationships. I met “IRL” with fellow internet friends quite a few times. One day, I remember browsing the list of threads and learning about someone’s passing. Their significant other posted a short message because the forum meant a lot to this person.

Most of the time, I didn’t know the identities of the persons talking with me. We were all using nicknames and put tidbits of information in bios — “Stuttgart, Germany” or “train ticket inspector.”

And then, Facebook happened. At first, it was also all about interest-based communities — attending the same college is a shared interest, after all. Then, they opened it up to everyone to scale beyond universities.

When you look at your list of friends, they are your Facebook friends not because you share a hobby, but because you’ve know them for a while.

Facebook constantly pushes you to add more friends with the infamous “People you may know” feature. Knowing someone is one thing, but having things to talk about is another.

So here we are, with your lousy neighbor sharing a sexist joke in your Facebook feed.

As social networks become bigger, content becomes garbage.

Facebook’s social graph is broken by design. Putting names and faces on people made friend requests emotionally charged. You can’t say no to your high school best friend, even if you haven’t seen her in five years.

It used to be okay to leave friends behind. It used to be okay to forget about people. But the fact that it’s possible to stay in touch with social networks have made those things socially unacceptable.

Too big to succeed

One of the key pillars of social networks is the broadcasting feature. You can write a message, share a photo, make a story and broadcast them to your friends and followers.

But broadcasting isn’t scalable.

Most social networks are now publicly traded companies — they’re always chasing growth. Growth means more revenue and revenue means that users need to see more ads.

The best way to shove more ads down your throat is to make you spend more time on a service. If you watch multiple YouTube videos, you’re going to see more pre-roll ads. And there are two ways to make you spend more time on a social network — making you come back more often and making you stay longer each time you visit.

And 2018 has been the year of cheap tricks and dark pattern design. In order to make you come more often, companies now send you FOMO-driven notifications with incomplete, disproportionate information.

This isn’t just about opening an app. Social networks now want to direct you to other parts of the service. Why don’t you click on this bright orange banner to open IGTV? Look at this shiny button! Look! Look!

And then, there’s all the gamification, algorithm-driven recommendations and other Skinner box mechanisms. That tiny peak of adrenaline you get when you refresh your feed, even if it only happens once per week, is what’s going to make you come back again and again.

Don’t forget that Netflix wanted to give kids digital badges if they completed a season. The company has since realized that it was going too far. Still, U.S. adults now spend nearly six hours per day consuming digital media — and phones represent more than half of that usage.

Given that social networks need to give you something new every time, they want you to follow as many people as possible, subscribe to every YouTube channel you can. This way, every time you come back, there’s something new.

Algorithms recommend some content based on engagement, and guess what? The most outrageous, polarizing content always ends up at the top of the pile.

I’m not going to talk about fake news or the fact that YouTubers now all write titles in ALL CAPS to grab your attention. That’s a topic for another article. But YouTube shouldn’t be surprised that Logan Paul filmed a suicide victim in Japan to drive engagement and trick the algorithm.

In other words, as social networks become bigger, content becomes garbage.

Private communities

Centralization is always followed by decentralization. Now that we’ve reached a social network dead end, it’s time to build our own digital house.

Group messaging has been key when it comes to staying in touch with long-distance family members. But you can create your own interest-based groups and talk about things you’re passionate about with people who care about those things.

Social networks that haven’t become too big still have an opportunity to pivot. It’s time to make them more about close relationships and add useful features to talk with your best friends and close ones.

And if you have interesting things to say, do it on your own terms. Create a blog instead of signing up to Medium. This way, Medium won’t force your readers to sign up when they want to read your words.

If you spend your vacation crafting the perfect Instagram story, you should be more cynical about it. Either you want to make a career out of it and become an Instagram star, or you should consider sending photos and videos to your communities directly. Otherwise, you’re just participating in a rotten system.

If you want to comment on politics and life in general, you should consider talking about those topics with people surrounding you, not your friends on Facebook.

Put your phone back in your pocket and start a conversation. You might end up discussing for hours without even thinking about the red dots on all your app icons.

Spot is a cryptocurrency app to control all your wallets and exchange accounts

Meet Spot, a beautifully-designed mobile app to control your cryptocurrencies. Spot looks like a portfolio tracking app. But the company has built a strong foundation to add more features in the coming months. Spot wants to be your unique gateway to the world of cryptocurrencies.

“Spot’s vision isn’t to build a portfolio tracker — we went a bit overboard with this feature,” co-founder and CEO Edouard Steegmann told me. “Eventually, we want to become the app to manage all your cryptos, a sort of Revolut but with a crypto DNA.”

When you first install the app, you can connect it to your existing wallets by adding public addresses. Even if you store your tokens on a hardware wallet, Spot can read the public details of your wallet to show them in the app.

“We have our own nodes on Ethereum, Bitcoin, Litecoin, Stellar and others to recover the amount on your wallet,” Steegmann said. Data is also cross-checked with third-party services to make sure that everything is fine.

Spot also lets you connect to an exchange account using API keys. Right now, the app supports Binance, Kraken, Bitfinex and Poloniex, but the company already plans to add more exchanges.

The app then gives you a detailed overview of your holdings across all services and wallets. You can see detailed charts, discover which token is performing better than the rest. It’s also one of the most well-designed mobile apps I’ve seen this year — animations and interactions are gorgeous.

But Spot doesn’t rely on an API to get pricing information for each token. “We’ve rebuilt CoinMarketCap from the ground up, and we’re one of few companies that have done it,” Steegmann said. The company stores pricing information for dozens of tokens across 150 exchanges. That’s a lot of pairings.

If you tap on the Spot logo at the top of the app, you can see the maximum value of your portfolio if you cash out on exchanges with the highest prices for your tokens. The company makes sure that there’s enough volume to show you coherent prices.

Spot thinks that controlling your own data is too important to rely on API calls. When you have your own data, you don’t have any API rate limits, you don’t have a major dependency and you can scale more calmly.

Up next, you’ll be able to trade directly in the app. The company isn’t going to build its own exchange, but you can expect to buy and sell tokens on a third-party exchange without having to visit the website.

“We think that many things will be tokenized and that there’s no user-friendly interface to transfer, receive, buy and sell,” Steegmann said.

The company raised a $1.2 million round (€1.056 million to be exact) from Kima Ventures and business angels, including Eric Larchevêque and Thomas France from Ledger, Jean-Daniel Guyot, Thibaud Elzière, Eduardo Ronzano, Nicolas Steegmann, Sébastien Lucas and Nicolas Debock.

Disclosure: I own small amounts of various cryptocurrencies.

Some iPad Pros could come bent out of the box

Apple has confirmed to The Verge that some iPad Pro models come slightly bent out of the box due to a manufacturing process. According to Apple, it shouldn’t impact your iPad in any way.

But if you buy a new iPad Pro, please make sure that it’s not bent in case you want to exchange it within the first couple of weeks. It’s still unclear if Apple plans to repair bent iPads once you’ve passed the return window.

The issue all started with a long forum thread on MacRumors filled with people complaining about their bent iPads. Contrarily to what most people thought, it isn’t the result of improper usage. This is due to a cooling process during manufacturing, Apple told The Verge.

And it’s true that iPads have become thin sheets of glass, aluminum and electronic components. If you try to break it in half, you’ll succeed. But it’s a bit more surprising that some iPads are already bent out of the box.

This could be particularly frustrating if you try to put your iPad down on a table and it doesn’t stay flat on the table. Here’s a photo that Bwrin1 posted on MacRumors’ forum:

I imagine that it could also create some issues if you try to use the Smart Keyboard or Smart Folio in some cases.

Coinbase lets you convert one cryptocurrency into another

It’s hard to believe that you still had to convert your BTC into USD in order to buy ETH on Coinbase. The company is finally adding direct cryptocurrency-to-cryptocurrency conversions.

The feature works with Bitcoin (BTC), Ethereum (ETH), Ethereum Classic (ETC), Litecoin (LTC), 0x (ZRX) and Bitcoin Cash (BCH). It is only available to U.S. customers for now, but the company plans to roll out the feature to other countries too.

Let’s look at the fees more closely. If you live in Europe or the U.S., every time you buy or sell cryptocurrencies using USD or EUR, you pay at least 1.49 percent in fees on top of the spread (the difference between the highest selling price and the lowest purchasing price). Fees are even higher if you’re using a credit or debit card.

Coinbase says that the spread between a fiat currency and a cryptocurrency should be around 0.5 percent but may vary depending on the trading pair and the order queue.

If you buy or sell less than 200 USD or equivalent, fees get much more expensive. For instance, a $10 order will generate $0.99 in fees, or 9.9 percent. Customers pay 3 percent in fees for a $100 order.

But the good news is that it’s a completely different story with token-to-token transactions. Coinbase doesn’t charge you any markup fee — but there’s some inevitable spread. And with some obscure trading pairs (exchanging ZRX for BCH for instance), you might end up paying around 1 percent in spread. Still, it’s a much better user experience for those who just want to trade on Coinbase.

Without even mentioning other exchanges, Coinbase Pro users have been able to trade between multiple cryptocurrencies for a long time. But Coinbase is still the entry gate for many new cryptocurrency users.

N26 launches its premium offering in the UK

Fintech startup N26 recently launched in the U.K. with a single product offering. You could sign up to a free account that gives you free payments around the world but no insurance and no free withdrawals in foreign currencies.

The company just added a second tier to its lineup in the U.K. And N26 is choosing to focus on N26 Metal in the U.K. You can now sign up to a Metal account for £14.90 per month (€16.59).

In other N26 markets, people can currently subscribe to N26 Black for €9.90 per month or N26 Metal for €16.90 per month. It’s interesting to see that N26 is using its fresh start in the U.K. to simplify its offering and target premium customers. The startup can still change its mind and launch N26 Black later down the road.

Basic customers can pay anywhere in the world without any foreign fee. The company uses Mastercard’s foreign exchange rates and doesn’t add anything on top. But ATM withdrawals in a foreign currency still cost 1.7 percent of the total amount.

Metal customers get the same perks in the U.K. and other European countries, such as foreign ATM withdrawals with no fee, a travel insurance package from Allianz and dedicated customer support.

N26 also provides partner offerings for N26 Metal subscribers. For instance, you can work from a WeWork office for free one day per month. Deals very from one country to another, and British customers get airport lounge access thanks to LoungeKey.

Your milage may vary depending on your favorite airport as LoungeKey doesn’t have a lounge in all terminals in all airports around the world. Now let’s see if N26 users outside of the U.K. will get a similar service in the future.