rewrite this title Varo Raises $123.9 Million to Scale its Lending and Banking Platform – Finovate

Varo raised $123.9 million in a Series G round led by Warburg Pincus and Coliseum Capital.

The bank will use the investment to scale its chartered banking and lending platform.

Alice Milligan, former chief marketing officer at Morgan Stanley, and Kevin Watters, former division chief executive officer at JPMorgan, have joined Varo’s Board of Directors.

Digital challenger bank Varo landed $123.9 million in financing this week. The Series G round, which boosts Varo’s total funding to $1.1 billion, was led by existing investor Warburg Pincus and new investor Coliseum Capital Management. Also contributing to today’s investment are existing investors such as Northview.

For new investor Coliseum Capital Management, the appeal lies in Varo’s ability to use its charter to compete with incumbent banks while expanding its product depth. “We are thrilled to join Warburg Pincus as long-term, collaborative partners, and support Varo’s work to expand its customer value proposition and to further differentiate from traditional banks,” said Coliseum Capital Management co-founder and Managing Partner Chris Shackelton. “We believe Varo is building a resilient and scalable platform from which to capitalize on a significant market share opportunity.”

Varo was founded in 2017 and secured a bank charter three years later. The fintech’s banking platform brings digital-first bank tools, from money management to lending, credit building, and savings accounts and tools. Varo offers two lending products, Varo Advance and Varo Line of Credit, which together generated $547 million in volume last year. The bank’s lending tools are powered by the company’s machine learning models that supplement traditional credit data, allowing the bank to lend to non-traditional borrowers.

As part of today’s announcement, Varo disclosed that Alice Milligan, former chief marketing officer at Morgan Stanley, and Kevin Watters, former division chief executive officer at JPMorgan, have joined its Board of Directors.

From a governance and operating perspective, Varo’s board sees the company’s combination of regulated banking discipline and modern technology as a key differentiator in a crowded challenger market. “Varo has built something rare: a technology-first customer experience paired with the governance and risk discipline required of a nationally chartered bank,” said Varo Bank Board of Directors Alice Milligan and Kevin Watters. Watters reports that Varo will use today’s funds to support the company’s next phase of growth by scaling its lending and banking platform.

“This combination of new capital, Coliseum’s partnership, and experienced banking leaders joining our board, is propelling Varo into its next phase of growth,” said Varo Bank CEO Gavin Michael. “We remain focused on operating with discipline and delivering meaningful impact for our customers.”

US-based Varo is one of the few true challenger banks that operate with their own bank charter, a structural advantage that gives it direct control over deposits, lending, customers, and unit economics. But a charter alone does not guarantee scale. Varo is still small when compared to competitors such as Chime, which operates under a sponsor banking model and has tens of millions of users. And while SoFi is Varo’s closest chartered competitor, the gap between the two is widening. SoFi recently reported record Q4 2025 results, including $1 billion in net revenue, $174 million in net income, and one million new members added in a single quarter.

As bank charters increasingly become table stakes in the challenger banking field, Varo will need to focus on scaling by differentiating its offerings and channels to reach new markets, especially as international players like Nubank, which just received regulatory approval to operate in the US, bring their customer-winning strategies to the US.

Photo by Landiva Weber

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