N26: Online banking rises at the most useful start in Germany

reThe N26 smartphone bank has become the most valuable German start-up five years after its launch on the market. Investors valued the company at another round of financing with 3.1 billion euros. The N26 is now in front of the Auto1 used car platform, which since January 2018 represents a worth of nearly three billion euros.

This continues the positive trend of the first half. German start-ups are very popular with investors – at least from a certain size. Already in the first six months, German start-ups have attracted more money than ever before.

"After the last round in January, some of the investors hired at the time asked us if they could not increase," said N26 founder and CEO Valentin Stalf WORLD. As a result, they had increased the previous round from 150 million euros to 420 million euros.

Among the lenders were foreign investors such as Insight Ventures Partners, Sovereign Wealth Funds, GIC, Tencent and Valar Ventures. The venture capital fund Earlybird and Allianz X, an investment company of insurer Allianz, were German. Axel Springer ("Bild", WELT) has already been one of the first investors in the N26.

Even if the bank does not need this emergency money, as Stalf badures, there are additional freedoms. "The continuous investment will allow us to grow faster internationally, to bring more innovation to our product and develop the team," he said. declared. Above all, advertising campaigns to strengthen the brand should help.

While the first customers are being unlocked in the United States, the next destination is clear. "For the coming year, we will enter the Brazilian market," said Stalf. Australia, Canada and Mexico are also on the verge of becoming a global brand.

The number of N26 customers rises to 3.5 million

The financiers have apparently found favor with the previous growth rate. "In the first half, we were able to increase the number of our customers from 2.3 million to 3.5 million, with about a quarter of the growth coming from Germany, France, Italy, Spain and Great Britain. Brittany are also doing very well, "said Stalf.

He looks forward to his goal for 2019: "We want to have between four and five million customers by the end of the year. The number of employees will increase from 1,300 to more than 1,500 currently.

Profit is not yet at the center of donor concerns in this phase. As long as the number of customers increases, negative titles such as N26 published in recent months due to poor accessibility and misuse of accounts are also accepted.

Problems were a thing of the past, says Stalf. "We were able to reduce the average wait time for customers to a few seconds by hiring additional staff in the service area." In addition, the time required to review account transactions prominently, as required by the BaFin Financial Supervisory Authority, has been significantly reduced.

With the recent N26 funding cycle, confirmed a trend of recent months: who has already collected a lot of capital, gets even more. "Foreign investors are focused on mature business models and are willing to invest large sums of money," says Peter Lennartz, partner at EY.

As a result, the number of so-called unicorns and start-ups, which are considered potential unicorns, is increasing. "This further enhances the attractiveness of Germany as a start-up site," Lennartz said. Other foreign investors would be attracted. A unicorn or a unicorn can be called a start-up as soon as its value exceeds the billion dollar mark, the equivalent of just under 900 million euros.

On the other hand, a problem of localization of the German start-up becomes obvious again in the N26: German investors rarely find themselves in major rounds of financing of more than 100 million euros.

"This is not particularly sustainable for an economy, if it is not able to finance itself from start-ups," says Florian Nöll of the Federal Association of German Start-ups. German investors are more likely to be involved in capital rounds in the early stages of the business, which yield a maximum of five million euros.

This means, on the one hand, that domestic investors of a certain size and maturity leave the field to international investors, which means that the most promising start-ups sooner or later become a foreign property.

In contrast, German start-ups still struggle to collect sums between 10 and 100 million euros. "Medium-term investments are needed to turn promising business ideas into successful businesses, that is, to build the business model, realize economies of scale and possibly even initiate internationalization. "said Lennartz, EY's partner. All attempts at the political level to gain big capital collection points, especially German life insurers, have so far failed.

The latest injection of funds for N26 reinforces Berlin's position as the dominant start-up site in Germany. Of the ten largest fundraisers in the first half, nine went to companies based in Berlin.

N26, the digital marketing company GetYourGuide and Adjust, at the top of the ranking, is at the top of the list. "In Berlin, the framework conditions are also in line with international standards," said Lennartz, EY's partner. Trends would be identified and implemented quickly.

Although Nöll, representative of the badociative branch representing the start-up, indicates that fundraising activities have also developed elsewhere, in Baden-Wuerttemberg and North Rhine-Westphalia, Berlin is becoming more and more a pole of activity. 39 attraction for international investors. According to Nöll, a foreign investor is rarely lost in Karlsruhe.

Axel Springer SE (WELT, "Bild") participates in the N26 through the Axel-Springer Plug and Play acceleration program with a small minority stake.