Fintech-Focused Cross River Bank Raises $620M, Valued At $3B+
It’s rare to see venture capital firms investing in a regular bank, but it recently happened. Cross River Bank, a New Jersey-based bank whose primary clientele is fintech companies, has closed a $620mn round led by Eldridge Industries and Andreessen Horowitz, the latter a blue-chip Silicon Valley venture capital firm. Other participants in the round included T. Rowe Price, Hanaco Ventures, and Whale Rock.
But, Cross River Bank isn’t so much a regular bank. It’s a bank with a single branch whose direct clientele isn’t individuals but fintech companies offering digitized banking services to end-users. In other words, Cross River provides banking services to fintech firms that, in turn, provide digitized banking services to their clients, with Cross River running in the background.
If you’ve ever traded cryptocurrency on Coinbase, took a loan on Affirm or Upstart, or transferred money through Wise (formerly TransferWise), you may have interacted with Cross River Bank. It’s a licensed, federally insured bank. Cross River’s banking services cover loan underwriting, money transfer, and management of user deposits.
- Most banks never raise money from venture capital firms, but Cross River has done that multiple times. The bank has forged close relationships with the venture capital and startup ecosystems and benefitted substantially. Before this round, it had raised over $200mn from VCs, including Battery Ventures, Andreessen Horowitz, KKR, and CreditEase.
- Cross River didn’t disclose the valuation that came with its $620mn round. However, a Bloomberg report pegs it at over $3bn.
Though having a single branch, Cross River managed $9bn of assets as of December 2021 (FDIC data). That figure seems large at face value but not in the grand scheme of the American banking system. Cross River is a relatively small player in the system but has found a good customer niche and served them well.
Many may (rightly) argue that Cross River is overvalued (at $3bn+) for a bank managing $9bn in assets. But, such is the timeline we’re in, and the fintech buzz surrounding the company may set it up for a good exit via a public listing in the future.