Digital bank Starling has achieved ‘unicorn’ status after announcing its valuation for the first time after it raised £272 million in fresh funds from investors. The investors pouring the cash into the fintech’s coffers did so, said Starling, at a valuation of £1.1 billion. That comfortably qualifies the young online-only lender as a newly anointed ‘unicorn’ – the term applied to start-ups valued at over $1 billion (£720 million).

The funding round that has cemented Starling as another unicorn fintech out of the UK was led by the asset and fund management company Fidelity. Other investors including the Qatar Investment Authority, the hedge fund Millennium Management and railways pension scheme RPMI Railpen.

To-date, Starling, founded by chief executive Anne Boden in 2014 before launching 4 years ago in 2017, has maintained quite a tight group of investors. Bermuda-based investor Harald McPike was Starling’s first big investor, followed by asset manager Merian, now owned by Jupiter.

Expanding that investment group at a unicorn valuation sets the tone of what Starling is worth more generally. Many observers see it as a first significant step towards an IPO – possibly as soon as later this year, though more likely within the next 1-3 years.

Unlike many fintech start-ups, or fast growth online companies generally, Starling has already achieved tentative profitability having moved into the black last year. The digital bank has now achieved four consecutive months of positive operating profit and has a monthly net income of around £1.5 million.

Around 2 million accounts have been opened with Starling over the past 4 years, including 300,000 small business accounts. Gross lending figures have surpassed £2 billion and the bank holds deposits worth £5.4 billion. Significant growth was realised after Starling was accredited as a lender able to offer government-backed bounce back and coronavirus business interruption loans. It was the only online-only bank to be accredited.

Alongside the announcement of the successful investment round, Starling also provided a trading update yesterday. The bank said it had brought in revenues of £12 million in January, bringing its annualised revenue run-rate up to £145 million, representing 400% year-on-year growth. Operating costs have remained at a roughly consistent level.

Ms Boden commented:

“Our new investors will bring a wealth of experience as we enter the next stage of growth, while the continued support of our existing backers represents a huge vote of confidence.”