Automatic saving app (and Plum competitor) Chip has raised a series A. From their investor email:
âwe have secured Series A funding to take Chip to the next level. This will rapidly accelerate our growth, enable us to invest substantially in our technology and launch ChipX. This round values the company at ÂŁ14,400,000, representing a 236% increase in valuation since our last round. In the last 12 months, we have grown to 75,000 accounts, built Chip 2.0, achieved over 300% growth in all key performance metrics and ended the quarter with 45,000 active savers, processed ÂŁ58m of saves and ÂŁ36m of deposits.â
But their recent deployment of their new app has been a right old mess, sadly, and I imagine it has dinged the confidence of users (autosaves not working, getting account balances horribly wrong etc).
Unsure what theyâll have in v2 of the app but v1 feels like a digital bank âfeatureâ rather than a product in itself. Lloyds Bank have been offering rounds up to a savings account for years now⌠Anyway Chip pitched at Balderton Capitalâs office yesterday, I didnât go but I got a email about this and it listed all the other startups pitching at the same event.
Coconutâs pitch from that event sounds interesting: Coconut is the current account that takes care of your accounting and tax, designed specifically for self-employed people and small business owners.
v1 had the great virtue of actually working. v2 feels like they have tried to shoehorn a lot of clever into it and inadvertently broken the basics. They may have fixed it all by now, but I am a bit cautious about trying it again.
Coconut sounds a bit like Tide, maybe, plus some other accounting magic?
Think Chip is mostly crowdfunded to date - or maybe an angel round as well. The series A is 4m, led by Balderton, donât know how much theyâve committed but Chip are reserving 1m of the raise for prev investors.
I looked at Chip last time round and again this time but havenât been swayed to invest - perhaps because I wouldnât personally use the product. But it seems like theyâve got a lot of traction and have been progressing wellâŚ
Not really sure about their USP as itâs basically a savings account (or am I missing something obvious?). Normal banks as well as challenger banks have identical or similar in the form of accounts / pots / vaults.
Chip v1 is a savings app (which I use) but the new product is a basically a peer to peer lending platform with returns of up to 8% as far as I can tell.
Iâd be interested to hear why you wouldnât use the app?
It has some limitations such at its limited to saving a max ÂŁ10k and you can only save a maximum of ÂŁ100/day but other than that the 5% interest is a good rate.
Iâve been using it for a couple of months and itâs working well for me.
I was quite a fan of Chip v1 - it worked, in that you could find youâd saved a fair bit without really noticing. I invested a little in one of its earlier rounds. I think Chip v2 adds âputting your saved money to work in p2p lendingâ, which is interesting.
The problem I had with v2 was that the basics felt pretty broken. Small things like the app falling over, the notifications seeming to go missing etc. And big things like your saved balance having to be corrected downward (several times) after they erroneously told savers theyâd saved higher amounts. And your saved balance not being available to withdraw, which felt alarming. Those are the basics for a saving app, and they should not be getting them wrong.
I hope that was just an temporary problem with v2, and that it is all fixed perfectly now. But it left me feeling like Chipâs competence with product is way behind its competence at raising money, and I have stopped using it. I do hope they do really well, though Iâm not investing further in this current round.
I stick ÂŁ200 into a Santander regular saver which has 5% interest. I believe Chipâs is 5% after referring 4/5 people but only lasts for a year before dropping to 1% - which is relatively good, but the Santander 123 account offers 1.5% up to ÂŁ20k. (I then use Monzo for spending!) I wouldnât use the loans and would go directly to P2P if I wanted that to cut out the middlemanâŚ
With crowdfunding itâs difficult to invest in something that you donât use, or fully believe in, as youâll be invested for many years!
As a devout chip user this is good news! They have stalled slightly in development recently and I think they underestimated the challenges of their proposal.
The recent update suggests that they are coming out of the woods and if they can pull off what has been promised it will be a game changer for sure!
Part of the update from Chip:
"We have some big news regarding Monzo & Starling coming in the next 2 weeks. Weâve built a solution that will let Chip work with any (yes ANY) bank in the UK⌠stay tuned.
ChipX⌠XVIPâs are getting a BIG email next week. Weâre weeks away."
Target end dates - we will tell you if youâre on track to hit your goals. Whatâs a race without a finish line?
Smart allocation settings - you have control over how much of each save is allocated to your different goals.