App-only bank Tandem is worth £65 million - and it hasn't even launched yet

Startup app-only bank Tandem is going public with its finances ahead of a crowdfunding campaign later this month, revealing it has raised £22 million at a £65 million valuation.

London-headquartered Tandem, which has no branches and will operate simply through an app, raised the cash from investors including eBay founder Pierre Omidyar's Omidyar Network.

While it had been known that Omidyar was an investor, the exact amount Tandem has raised and its valuation have not been public up until now.

Tandem founder Ricky Knox told BI: "Pierre Omidyar has a pretty awesome fund that's trying to improve people's lives. It's a philanthropic impact fund. They're investing in us because we're pretty serious about our mission of making people actually better off rather than worse off as their bank.

"Banks in the UK just have never really wanted to make their customers better off, they've never really seen that as their job. They see that as looking after your money and putting it in a safe place. We're setting our stall quite differently."

Tandem got its banking license last year but is yet to launch. It plans to have a data-heavy approach to banking that can ensure customer are getting the best deals. Knox told BI last month: "Our primary focus is helping you sort out your finances. We'll run through everything and figure out how we can get you a better deal on all the stuff you're buying right now, whether it's your utility bill, whether it's credit card, your mobile bill."

Knox is going public with the total raised by Tandem and its valuation ahead of a crowdfunding round to raise £1 million that goes live on May 20. Tandem has already given away 5,000 single shares to so-called cofounders who it wants to help shape the bank by giving feedback on how it should work.

Investors in Tandem's crowdfunding will be able to buy-in at the same valuation and price as its VC backers and can invest from as little as £15. The crowdfunding, supported by Seedrs, will be open to the 5,000 "cofounders" but also anyone who pre-registers interest on the company's website.

Tandem is one of a number of app-only banks - sometimes called "neobanks" - looking to launch in the UK this year. Rival app-only bank startup Mondo did a similar crowdfunding round earlier in the year, initially crashing Crowdcube's website with demand and later raising £1 million in just 96 seconds. Mondo was valued at £30 million in that round, while another rival app-only bank, Atom, has been valued at £150 million.

But Knox says: "The valuation post-money last round was just over £65 million which is actually a much higher number than Atom or Mondo. Atom has raised £123 million at £150 something million post-money, which means their pre-money for all of that money was only about £20 million. We're about double that."

Specialist US fintech fund Route66 Ventures and Silicon Valley early stage fund eVentures have invested alongside Omidyar Network.

If this becomes massive we want to destroy some big banks along the way

Asked why the investor base is all American rather than British, Knox told BI: "You haven't really seen a lot of your big European hits because there aren't really a lot of big style investors in the UK. The guys like Andreessen Horowitz or Sequoia, they have the firepower, they've got billions under management, so that when something starts to take off they can put hundreds of millions in.

"Most of the European funds have hundreds of millions and we're kind of a bit big for them to be honest. We've already raised £22 million and we're pre-revenue. We're going to need hundreds of millions of pounds if we grow as fast as we think we will. That makes us a very non-standard VC [venture capital] investment, whereas in the States they have a slightly more big picture approach."

Knox says the £22 million and the £1 million from the crowdfunding will go towards launching the bank, something that is scheduled for the end of this year. He added: "We're raising over the summer a much larger round. That's the money we'll use to grow the bank."

Don't expect to see a major bank take a stake in Tandem anytime soon. Knox says: "If you look at Atom, they've got BBVA as a major shareholder. What does BBVA think? Ultimately BBVA hopes digital banks won't take over the world, they hope it will be an incremental innovation.

"You hear Mark [Mullen, Atom CEO]'s rhetoric around it, he says it's all about partnership blah, blah, blah. But that's kind of giving up the fight already. If this becomes massive we want to destroy some big banks along the way."