Varo, a trailblazing fintech company, has announced significant changes in its leadership as it navigates ongoing financial challenges. Since its inception in 2015, Varo has raised over $1 billion in funding. However, the company remains unprofitable as of early 2024. Colin Walsh, the founder and CEO, recently stepped down, handing over the reins to Gavin Michael, a seasoned executive with experience at Bakkt, Citi, and JPMorgan Chase. This leadership transition marks a pivotal moment in Varo's evolution as the company strives to achieve profitability and secure additional funding.
In 2023, Varo raised a $50 million equity round, albeit at a lower valuation than its 2021 Series E round. The 2021 funding valued the company at $2.5 billion post-money, while the latest round pegged it at $1.85 billion post-money. Despite these funding efforts, Varo has only secured $29 million of the anticipated $55 million Series G round. The company reported a significant loss of nearly $65 million in a December 2024 call report, highlighting the financial hurdles it faces.
Varo's transition in leadership is not just about addressing financial woes but also about steering the company into its next phase of growth. A company spokesperson emphasized this strategic direction:
"This transition is about the next phase of Varo’s evolution."
Gavin Michael's appointment as CEO is seen as a strategic move to build on the foundation laid by Colin Walsh, who will remain on Varo's board and maintain a significant stake in the company. The spokesperson elaborated on Walsh's confidence in Michael's leadership:
"Colin has known Gavin for 19 years, and after working closely with him these past months, Colin is confident he’s the right leader to build on the company’s foundation that he built for the last decade, while maintaining Varo’s commitment to financial inclusion."
Varo has been a pioneer in the fintech space, becoming the first all-digital nationally chartered U.S. consumer bank when it obtained its national bank charter in 2020. The company has experienced strong customer growth and remains optimistic about its path to profitability. In a 2022 interview with TechCrunch, Varo highlighted its potential to achieve sustainable financial success while continuing to focus on financial inclusion.
Leave a Reply