Are neobanks running out of money? 😬; NFTs have an insider trading problem 👀; Is Stripe really worth $95B? 🤔

Good Morning FinTech, 3 June

Good day Everyone,

And happy Saturday! Due to the 1000+ Talent Pool Post, Friday’s issue has been moved to today. And today we’re looking at whether neobanks are running out of money, the NFTs that now have an insider trading problem (could be big!), and questioning whether Stripe is really worth $95 billion. Let’s jump straight into it:

Are neobanks running out of money? 😬

The news 🗞 US challenger bank Varo Bank risks running out of funds before the end of the year, according to a regulatory filing, as per Banking Dive.

More on this 👉 One can remember that Varo was the first US neobank to obtain a banking charter from the Office of the Comptroller of the Currency (OCC). It was a huge and long-anticipated milestone that reportedly cost Varo around $100M and took 3 years.

Having achieved the above, the challenger bank raised $510M last year and was valued at $2.5 billion. The valuation was mostly associated with their banking charter.

Yet, according to the regulatory filing, by the end of March this year, Varo had $263M in equity and a burn rate of $84M in Q1 2022. At that rate, the bank might run out of money by the end of the year. Wow! 😬

Responding to the reports, Varo’s CEO Colin Walsh assured that the bank would not need to raise additional capital to stay afloat, stating that the figures in the report were taken out of context.

Why does this matter? First, Varo might not be able to raise any fresh funding because of its performance. Second, Varo could be used as a proxy for assessing the future of other neobanks. Here’s the takeaway: