Chip seeks mega-raise to sustain its growth momentum with global expansion

The news: The UK-based personal finance management (PFM) app is planning to raise up to £100 million ($128.2 million) over the next two years through a mix of crowdfunding and institutional backing, per Finextra.

About Chip: Launched in October 2016, Chip offers users access to PFM tools, interest-bearing savings accounts—and more recently, investments.

How we got here: Chip will use the funding to expand into new markets following a strong year of user and revenue growth.

  • In the past year, Chip’s user base grew by more than 60% to over 400,000. The average user’s balance reached £2,961 ($3,797) this September, up from £459 ($588) at the same time last year.
  • Users’ higher balances likely enticed some to switch to Chip’s premium offering, which added an investing platform in May. Chip offers three investment funds for a £1.5 ($1.9) monthly fee or 10 funds for £3 ($3.8).
  • Investing typically offers higher returns over the long term than savings, increasing the appeal of paying for investment services rather than leaving deposits in the free interest-bearing savings accounts.
  • This shift likely helped increase Chip’s revenues by 500% since December.

Why going global is the right move: Chip faces tough competition in the UK. International expansion—likely into Europe—offers an opportunity to cast a wider net to keep up the momentum of its user acquisition.

  • Despite Chip’s record year, its offering remains more expensive than that of its close peer, Plum, which reached 1 million users last year and offers access to 12 funds for just £1 ($1.3) a month.
  • Emma has 600,000 users and plans to add stock and crypto trading in Q4 to better compete with the likes of Chip.
  • The UK is also home to mature neobanks that offer similar PFM tools—and even trading in the case of Revolutper The UK Neobank Competitive Edge Report 2020.
  • Chip’s expansion abroad lets it capitalize on growing fintech activity in less mature markets. For example, although fintech ecosystems in France and Germany are burgeoning this year, they still trail far behind the UK.