The British digital bank Starling has raised 50 million in fund-raising from the Growth Equity Investment arm of Goldman Sachs. The cash is on top of a 272 million investment round Starling announced last month, which comes from a private lender at 1.1 billion. The deal with Goldman is still subject to regulatory approval. Securing the support of another global financial heavyweight demonstrates the strength of demand from investors and represents yet another vote of confidence in Starling, said Starling CEO and founder Anne Boden. Starling is one of the biggest neobanks in the UK, a term used to describe the wave of incumbent Fintech start-ups founded in the last decade with the aim of taking on the existing banks with branchless banking. It has more than 6 billion in deposits- up from 1 billion just over a year ago. Starling has tried to differentiate from rivals like Monzo and Revolut with a focus on small business banking. Out of its 2 million business users, around 350,000 are total clients. Starling says that it now holds a 6% share of Britain's Small- and Medium Enterprise banking markets.
Another thing Starling says separates it from its competitors is that it's managed to turn profit. For years Neobanks have been losing money and are now under heightened pressure to prove their businesses can make money. Goldman's investment in the company comes after reports that JPMorgan and Barclays Starling had shown an interest in buying goldman, although Starling has denied this. Big banks are increasingly looking to partnerships with tech firms- both small and large- to remain relevant at a time when smartphone banking is commonplace. Marcus launched its own competing digital banking service called Goldman in the U.K. in 2018. The bank paused applications for its initial savings account in Britain last year due to a surge in deposits during the easy lockdown of Covid. It has since reopened applications to British banks and Goldman is n't the only U.K. banking giant to take over the U.K. market- JPMorgan is launching a digital banking brand of its own for UK customers. Starling is one of the leading and most innovative digital banks in the U.K. with an ambitious technology-first leadership team and addressing a deep market opportunity, said Goldman Sachs Managing Director James Hayward. We are delighted to be supporting their growth with this investment and believe the company has a sustainable long-term earnings potential. Starling plans to expand the fresh cash in Europe and potentially make a merger or acquisition. The company restarted talks last year to secure a banking license in Ireland after putting them on hold initially due to the coronavirus pandemic.