Neo-bank Aspiration raises $135M in Series C funding round

Aspiration, the fintech startup that’s brought a socially and environmentally conscious twist to the burgeoning realm of digital banking, has sealed a $135 million Series C funding round, Fortune has learned.

The Series C takes Aspiration’s total funding raised to date to more than $200 million, the company said, though it declined to provide a post-round valuation. Existing venture capital investor Alpha Edison led the round and was joined by the likes of UBS O’Connor, DNS Capital, Radicle Impact, Sutter Rock, and Social Impact Finance.

Aspiration intends to use the funds to further grow its services and product offerings, which are currently used by more than 1.5 million customers. The branchless Los Angeles–based bank has positioned itself as a “socially conscious, sustainable” alternative to major financial institutions; customer deposits and investment vehicles like its Redwood Fund are free of fossil-fuel investments, while products and features include “Plant Your Change,” which rounds up debit card purchases to the nearest dollar and uses the change to plant trees.

With the coronavirus pandemic disrupting traditional commerce around the world and keeping many indoors, present-day circumstances appear to lend themselves to tech-enabled, online-only “neo-banks” like Aspiration and rivals Chime and Varo.

Andrei Cherny, Aspiration’s cofounder and CEO, tells Fortune that March and April were the bank’s “two biggest months ever” in terms of debit card transactions, adding that the firm has seen “enormous demand” from its customers for additional “sustainability-focused financial products.”

“I think this crisis is accelerating trends that were already occurring, and one of those is the shift toward digital banking,” Cherny says. “We think that this funding round will allow us to build out America’s preeminent socially conscious financial home for millions of people.”

Aspiration’s latest funding round comes in the wake of reports late last year that it was having trouble securing investors for its Series C amid a shaky, post-WeWork private funding environment for startups. While the Series C is by far Aspiration’s largest funding round to date, it falls short of the $200 million that the company was reportedly targeting last spring.

Still, Aspiration managed to seal a larger Series C than its bigger rival Chime, which raised $70 million in May 2018. Chime has since gone on to raise more than $1 billion in total funding at a current valuation of $6 billion, per PitchBook data.

According to Alpha Edison managing partner Nate Redmond, Aspiration’s commitment to social and environmental values differentiates it from major financial institutions that offer a “commodity” banking product. It also addresses some of the “fissures” that have emerged since the global financial crisis between the banking system and an increasingly skeptical general public.

“We see them addressing what’s fundamentally broken in financial services, which is the trust-based relationship between a bank and its customers,” Redmond says. “We had a chance to watch this company operate and to map their progress, and that provided the foundation for us to say, ‘Okay, this company can grow for a long time from a differentiated position.’”

Aspiration and other sustainability-minded financial firms are emerging at a time when ESG investing has gained unprecedented prominence—forcing some of America’s largest financial institutions to recalibrate their own approach to doing business with certain industries.

Among those who have been drawn to Aspiration’s mission include Hollywood actors and environmentalists Leonardo DiCaprio and Orlando Bloom, both of whom are among the startup’s financial backers. DiCaprio joined the company’s board of advisers last year.

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