Lunar, a neobank based in Denmark, raised money at a $2.2 billion valuation last year from a group of high-profile investors, including Tencent, Heartland, Will Ferrell, Kinnevik, and IDC Ventures, with the goal of building a financial “super app.”
However, times are tough for startups at the moment, and Lunar has raised funds again, this time with the more modest goal of “shortening the path to profitability.”
Lunar has closed a €35 million funding round, which will refine its product and profile in the Nordics. The company has around 500,000 users in Denmark, Norway, and Sweden, which is the same number it disclosed when it announced funding in March 2022.
This suggests that not only is the startup operating at a loss that’s eroded its runway, but growth has stalled for the company in the past year.
Focus on Earnings
“The capital markets that we and other similar companies raise money in have changed completely, with earnings now becoming the key focus,” said Ken Villum Klausen, Lunar’s CEO. “Last year we improved our product, attracted more customers, and increased our revenue streams significantly. We will continue to do so in 2023 and the years to come because the market needs a serious challenger in the industry.”
The €35 million raised by Lunar comes from the “vast majority of existing shareholders,” but the exact investors have not been disclosed. Klausen says the company is “humbled” by the trust investors have in it, and Lunar has raised $460 million to date.
The choice investors make when companies they’ve backed with significant funding already need more to shore up their activities is an interesting one, especially given the current market climate.
Building a New Financial Ecosystem
Lunar is one of several neobanks that have hit the market in recent years with the goal of building a platform of banking and financial services, offering a more user-friendly and personalized mobile experience and better rates for basic services.
In its case, Lunar is aiming to win over customers from incumbent banks by providing new services that leverage personalization and analytics to give users more insights into their financial standing, planning, and futures.
In addition to its core banking services, Lunar also offers a metal Visa card, an investing platform, loans, cryptocurrency trading and B2B payments for small and medium-sized businesses. The current market conditions have affected some of these services, with the stock market down, crypto losing its speculative appeal, and interest rates not being favourable for loans.
Lunar remains committed to its approach despite the turmoil in the financial markets, and investors want to help the company build a new financial ecosystem and deliver banking services in a whole new way.
Lunar’s short announcement on the funding round was light on details, and the company has yet to disclose its plans for the funding or details on the performance of its existing business.