Latest news with #Iconiq
TechCrunch
a day ago
- Business
- TechCrunch
Iconiq VCs spent two years courting Chime and the firm isn't selling its stake
The VC tech world was abuzz on Thursday when neobank Chime successfully became a public company. Chime raised $864 million on a its $27 share price, which popped big, opening at $43. This wasn't the biggest IPO of the year. CoreWeave, for instance, raised $1.5 billion in March, and its first-day market cap hit around $14 billion, too. (Its share price and valuation has soared since then). However, Chime's cap table includes an absolute who's who of Silicon Valley investors, many of whom are publicly and privately celebrating the win for their portfolio company. This includes Iconiq's Yoonkee Sull. He and his venture investing partner at Iconiq, Greg Stanger, spent two years watching and pursuing Chime before writing a check, Sull told TechCrunch. Iconiq is, of course, well known in the Valley as the family office to some of the industry's most celebrated billionaires like Mark Zuckerberg. With $80 billion of assets under management, it invests in everything from stocks to real estate and also has a venture capital arm, which largely invests at the growth stage. Its portfolio includes Benchling, Canva, Databricks, Glean, Notion, and Ramp. If you've heard of a company, Iconiq probably has a stake. Sull said that he and Stanger first met Chime co-founders Chris Britt and Ryan King in 2017. They even went to the Chime offices for the meeting, not the other way around. Iconiq's VCs tend to prefer outbound deals with well-vetted founders, rather than inbound pitch-to-us sessions. Still, to have Iconiq come calling just a year after Britt and King's humbling 2016 was quite the turnaround. Chime was running out of cash in 2016. King had been desperate to raise and turned down by over 100 VCs, he told TechCrunch. Lauren Kolodny, then a partner at Aspect Ventures, today a co-founder of Acrew Capital, saved the company with a $9 million Series A extension round. Techcrunch event Save $200+ on your TechCrunch All Stage pass Build smarter. Scale faster. Connect deeper. Join visionaries from Precursor Ventures, NEA, Index Ventures, Underscore VC, and beyond for a day packed with strategies, workshops, and meaningful connections. Save $200+ on your TechCrunch All Stage pass Build smarter. Scale faster. Connect deeper. Join visionaries from Precursor Ventures, NEA, Index Ventures, Underscore VC, and beyond for a day packed with strategies, workshops, and meaningful connections. Boston, MA | REGISTER NOW Sull admits that that casual 2017 meeting 'was early days at that point in time, but I think what they wanted to accomplish and do was crystal clear,' Sull says of the founders. Chime positions itself as banking and credit-building resources for the average person and working class — the ironic opposite from Iconiq's bread-and-butter wealth management business. As the VCs watched the founders over the next two years 'deliver against the things that they said they would do,' Sull says, Iconiq was convinced to elbow into Chime's oversubscribed $200 million Series D in 2019. Series D investors paid $5.22 a share, Chime disclosed in its S-1 filings. 'When we made our investment in 2019 there were quite literally a couple dozen other competitors going after a similar thesis or idea,' Sull said. Iconiq chose Chime, and participated in follow-in rounds, because the investors thought the founders were more focused and didn't get distracted by 'shiny new objects.' For follow-on rounds, Series E investors paid about $41, and Series F at $60 a share, Chime disclosed. So even with a solid IPO, not all the private shares are above water yet. Sull wouldn't comment on how much Iconiq paid for its stake, which is not large enough to be publicly disclosed. But he did say Iconiq didn't want to liquidate. 'We have our shares, and we're selling in the IPO,' he said. Existing shareholders, including employees, are now subject to a 180-day lock-up period, too. Iconiq is one of many of Chime's backers taking a victory lap at Chime's graduation to become a public company. Investor Shawn Carolan, from Menlo Ventures, wrote in his congrats blog post: 'As with most consumer tech winners, what may have looked to some like an overnight success story was actually many hard years in the making.' Then there's Cathay Innovation, which led Chime's $15 million Series B in 2017 and happily sold 3.75 million shares in the IPO of its 15.3 million share stake. Series B shares were priced at 47 cents, Chime disclosed.
CNBC
2 days ago
- Business
- CNBC
Chime opens at $43 in Nasdaq debut after pricing IPO above expected range
Chime opened at $43 in its Nasdaq debut on Thursday after selling shares at $27 each in an IPO that valued the online banking company at $11.6 billion. Late Wednesday, Chime raised about $700 million in its offering, and existing investors sold an additional $165 million worth of shares. The stock is trading under the ticker symbol CHYM. Chime's IPO, from a valuation perspective, represents a big step down from where venture investors like Sequoia Capital valued the company in its last fundraising round in 2021, when private tech markets were raging. The valuation at the time was $25 billion. Still, Chime's offering is the latest sign that the fintech IPO market is opening up after a multi-year freeze brought on by rising interest rates and valuation resets. Recent debuts from eToro and crypto company Circle have rekindled optimism in the sector, with both stocks seeing strong initial pops. Chime reported $518.7 million in revenue for the most recent quarter, a 32% increase from a year earlier. Net income narrowed slightly to $12.9 million, down from $15.9 million in the same period last year. CEO Chris Britt said Chime has built a loyal user base by serving Americans earning $100,000 a year or less, a group often overlooked by traditional banks. "Two-thirds of our customer base use us as their direct deposit account and primary account relationship," Britt told CNBC's David Faber. "We help our members avoid fees, get access to short-term liquidity, build their credit and build their savings — and it's that combination of services that really resonates and matters most to the everyday consumer." Britt said the company reached $25 million in adjusted profitability in the first quarter and has improved its adjusted profit margin by 40 points over the past two years. The company's top institutional shareholders are DST Global and Crosslink Capital. Iconiq was one of the firms that invested six years ago, when Chime raised money at a $1.5 billion valuation. "We first invested in Chime in 2019 and continued to invest through subsequent rounds because of their singular, unwavering focus on serving everyday Americans — and the trust they've built with that core customer base," Yoonkee Sull, general partner at Iconiq, said in an interview. The average Chime customer completes more than 55 transactions per month using the Chime card and interacts with the app four to five times a day. Active member growth rose 23% in the first quarter from a year earlier, Britt said, with 8.6 million monthly active users and an increasing number turning to Chime to serve as their primary banking relationship. Customer acquisition doesn't come cheap. Chime disclosed in its prospectus that it spent $1.4 billion on marketing between 2022 and 2024. Britt said the retention rate is above 90% once users set up direct deposit. "Sometimes for people, it takes a change in life — a change in their career, a job change — to be the point in time when they actually make the switch and use us as a primary bank account," he said. The company's core revenue comes from interchange fees, the charges merchants pay when consumers swipe Chime-issued debit or credit cards. Britt said 72% of Chime's revenue is payments-driven, versus traditional banks that rely heavily on fees from overdrafts and minimum balances. "It's pretty simplistic," said Dan Dolev, an analyst at Mizuho. "I'm actually surprised by how unsophisticated that business model is." Chime's performance in the public markets may set the tone for what comes next. Several other fintech players, including Klarna, Gemini, and Bullish, have already filed for IPOs publicly or confidentially. "If it goes well — and you'll know that in the next two to three months — I think you'll see much more receptivity" from other companies in the pipeline, said David Golden, partner at Revolution Ventures and former head of tech investment banking at JPMorgan Chase. "If it doesn't go well," Golden added, "I think they'll continue just to sit on their hands and wait it out."
