Varo, a federally chartered digital bank, has raised $123.9 million in a Series G funding round. The terms of the funding were not revealed.
According to a release, new investor Coliseum Capital Management and existing investor Warburg Pincus led the round. Existing investors also participated in the funding.
Varo Bank CEO Gavin Michael said the cash infusion and partnership with Coliseum will help the company reach its next phase of growth. Several new board members were also announced, including Alice Milligan, former chief marketing officer at Morgan Stanley, and Kevin Watters, former division chief executive officer at JP Morgan.
It has been reported that Varo continues to generate losses, with net losses continuing to grow. Varo posted a $20.8 million net loss in Q4 2025. A report from last year indicated a contraction in the business, potentially reflecting an inability to execute its stated goals.
A digital-only bank that does not have to cover the cost of expensive real estate and employees to operate physical locations makes a lot of sense. But Varo’s attempt to cater to the masses, rather than the mass affluent or sophisticated youth, may have created challenges for the banks as they seek to scale their services.
Varo has been in business for ten years, founded in 2015, and was the first independent digital bank to earn a federal bank charter. Meanwhile, some digital bank competitors have turned the corner to profitability, and a new legion of “everything platforms” is poised to challenge digital banks. This is not to mention that legacy banks are slowly adapting, improving their digital services, and making their platforms more sticky for existing customers.
