N26 raises $160 million from Tencent and Allianz

German startup N26 just raised a $160 million Series C round led by Tencent and Allianz — some of N26’s existing investors are also participating. The company has attracted 850,000 customers and raised $215 million in total. N26 is building a retail bank from scratch.

The company plans to double down on everything it’s been doing so far. It means more expansions, more partnerships with other fintech products, more features and more engineers. Allianz is investing through its Allianz X investment arm.

“I think Tencent and Allianz are a great combination or investors,” N26 co-founder and CEO Valentin Stalf told me. “In the last 10 years, Tencent became one of the five most valuable companies in the world — it’s a pioneer in mobile payment and also fintech in general.”

Tencent is the company behind WeChat, mobile payment service WeChat Pay, WeBank, TenPay and countless of products.

“On the other hand, when you look at Allianz, it’s one of the most traditional finance companies in the world and also from Germany,” he continued. “It is a traditional brand that also believes in the changes of the financial industry.”

The company goes one step further and is also setting some aggressive goals with this funding round. N26 plans to reach more than 5 million customers by 2020. This year alone, N26 plans to process $16 billion (€13 billion) in transaction volume. British competitor Revolut currently processes $1.5 billion per month. It seems like there’s enough room for both of them to grow for now.

This funding round really brings N26 to a pre-IPO stage Valentin Stalf

While many companies use funding rounds to share some information about their roadmap, N26 has already announced a few things. N26 plans to roll out its product in the U.K. and the U.S. later this year.

Some products, such as savings, invest, overdraft and insurance are limited to Germany and/or Austria. The company will roll out those features to more markets in the future.

It’s also worth noting that N26 is now talking about leveraging artificial intelligence to create a smart banking experience. So you can expect some level of automation in the future if you’re fine with a robot managing your money.

I also asked Stalf about plans to expand beyond Europe and the U.S. given Tencent’s investment, but it’s not on the roadmap for now. “It doesn't necessarily mean anything about our plans to go to Asia,” he said.

There are now 380 people working for N26. The company plans to hire more people, which should speed up product updates. And here are two things you can expect this year. First, N26 is working on shared accounts so that you can use your N26 account with your significant other. Second, you can expect some multi-currency features after the U.K. launch.

“It's a good round to be as independent as possible,” Stalf said. “This funding round really brings N26 to a pre-IPO stage. I think we see a clear path to a very sustainable company with this funding round. Maybe in the next five years there will be an IPO.”

That’s one way of saying that N26’s valuation is now too high for a quick acquisition. Nevertheless, it’s great to see a potential European tech giant growing so quickly and willing to remain an independent company.

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