N26 Founder Valentin Stalf on IPO Plans, EU Regulation
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To the fintech space with a particular lens on what's happening in Germany. N26, the German challenger bank, backed by the likes of Peter Thiel, Tencent and Li Ka-shing. At the end of 2024, this business reported 4.8 million revenue generating customers on its road to recovery.

The company, founded in 2014, was one of the original banking disruptors but ran into a major hurdle when German regulator BaFin put a cap on how many new customers it could take due to concerns around money laundering controls. The cap expired last year and 26 has since seen a jump in new customers and is forecasting a 40% revenue rise for this year. Joining us now, very pleased to say, is Valentin Stauff, N26's CEO and founder. Valentin, good morning. Thank you for joining us.

What a turnaround then for the business. Can it be sustained? Once had a valuation back in 2021 of about $9 billion. When did you get back to that level of valuation, given the turnaround that you've seen at the business?

Thanks very much for having me. Let's see when we get back to these valuations. I can say that the business has developed very well over the last year, actually the last 24 months already. But we'll see once we grow into the valuation again. I think we have seen big corrections over the last year when it comes to tech valuations. So as founders, and we can only focus on valuations,

focusing on the business KPIs and making the business more sustainable, growing revenue as you mentioned already and many more things. In terms of just thinking about the cost of that regulation, before we sort of move on and talk about your future plans, how much do you think that cap to growth actually cost you in terms of Euros?

So I think obviously it cost us to some extent new customers weren't able to grow as fast as possible as we could have seen and as the demand has been from customers. But at the same time we've been learning a lot, we've been exchanging extremely well with the regulator over the last couple of years so there's a lot of a big learning part. I think it's very hard to put a number exactly to what it cost us but a lot of foreground customers but now the time for to gain them back or gain them the first time. Is it an example do you think Valentin?

of overreach by German regulators. Is it a case study in how regulators sometimes overstep at a time, and of course, when Europe is very much focused post-Mari Drago report on the need to innovate?

I mean, in Europe in general, I think we are not in an area of the world where we have very loose regulation. I think that is a fact. But as a bank, we need to deal with that. We are in a highly regulated industry. I think that's a good fact. And I think we built the trust with our consumers because the industry is highly regulated. So no one needs to be afraid.

At the same time, we also need to work on how we do a more proactive steering of companies, more proactive regulation. And I think that's definitely a thing to focus over the next years instead of, you know, backward looking regulation to do more proactive work together with the regulators and shape the regulation for the future.

In terms of the competition in this area, Bloomberg reported last week on Revolut, its revenue soaring. I mean, I wonder who you think your competitors are, Revolut, Wise and so on. But just thinking about Revolut, their customer base reached 52.5 million people at the end of 2024, basically more than HSBC.

What do you think of that kind of competition? I mean, you're still pretty far behind that. How quickly can you catch up? What do you think about growing your customer base now? I think we are very focused on the fundamentals. It's not only about the customer number, but we are growing our revenue about 30, 40, 50% year on year. We've done that last year with 40% growth in revenue just coming out of the growth cap. We expect a similar number this year. We're already more than half a billion in revenue

This year, they will be booking more than that throughout the year. So I think we are on a very, very good trajectory. I think the opportunity is even bigger. And I think some of the competition shows that there's even more opportunity. We are set to catch up on that. We haven't been able to do that during the growth restrictions. We are there now.

But it's not only about the customer number, it's really about their customer engagement. It's how much they do with the account. And when it comes to deposits of customers and so on, we're actually the leading neobank around the world in terms of number of deposits per customer, transaction volume per customer. And so we're slightly different positioned than some of the others, but I think that the market is still big. If you look at...

at how many of the companies are active in the challenger banking space in Europe, in all markets, and we're live in 24 markets. It's not many. It comes down to maybe a couple of a handful of companies. And I think the market is ready for disruption. It's disrupted right now by us and by others. And that will continue over the next couple of years. What is the timeframe for sustainable profitability at the business?

So we have been starting profitable quarters last year with the third quarter, and we're going to continue that. I think we're going to book a profitable year this year as well. So I think profitability is there, and we'll continue over the next years. Revolut's thinking about IPO. Might you be looking at that? If so, when? Time frame? Obviously, our audience is always interested in that.

Of course, I think we would have liked to see some of the companies being ready for IPO the last couple of months to see them list and get some data points in terms of valuation. I mean, the tech industry in general hasn't seen a lot of listings over the last years and therefore,

I think it would be good to have the next wave. I think we're not going to be part of this next wave in the next year, but we're definitely also aiming for going more into an IPO in the next couple of years. So it might be three years from now, it might be a little longer, but that's kind of the timeframe that we are thinking of. Okay, so maybe a two to three year timeframe for listing publicly. And obviously the capital markets are

are challenged on that front right now for all businesses potentially looking to list. How are you set for funding, Valentin? Are you looking to raise, presumably you're looking to raise again within that timeframe?

So, as I mentioned, the company is actually from the fundamentals profitable. We are always, and we have been in the past and we also in the future, we're always looking for the best setup of investors, but not from a business need, but more from the best capital structure. Currently, we're not raising, but before an IPO, it's maybe likely that one investor will join, maybe another investor will sell a part. So, I think that's more the transactions that we might see in the next couple of years. Hmm.

We're speaking to Valentin Salf, who is the founder and CEO of N26, the challenger bank, neobank here in Europe. Valentin, I wanted to ask you a question, perhaps left field, but I think very much of interest also to our audience, on lending to industrial and military companies. I mean, we've seen Germany talking about re-industrialization, re-armament. What's your position on that in terms of facilitating that for customers?

So, I mean, today we're not offering accounts to business customers. We've only been starting to do that for small and medium businesses. So we're not in the business of really financing big production companies. I think there are other players being better situated to do that. But I think we definitely in Europe need to think about that and need to also...

help customers to produce goods and industrial goods to make Europe even stronger and provide good financing. And where we can play a part, we'll also try to play our part in the future. What would you prioritize if you were sitting in government, if you had the lever's power at your hands in terms of policies that would support the tech ecosystem of Germany and Europe?

I think first of all it's increasing life quality and it's the things that most of the people think about that live in Europe. It's bureaucracy, if you go to get a new passport, if you want to get a driving license, all these very simple things that also matter for our employees. We are employing more than 90 different nationalities and they all come to Germany and they come to Europe. We've also an office in Barcelona and they think of very, very good infrastructure, of a digital

a digital government. And then they go there and they want to get a driving license and it's taking them weeks. I think sometimes they don't even believe it. I think that's really where we need to start. We need to do the simple things. It's not a question of technology. It's a question of will, of

of using technology and making things much simpler for everybody, not the people that come here to Germany, to Europe to work, but also for the people that are already here, that are living here, to have a better day-to-day life. And I think that's the one thing that people should really focus on. And I think digitalization is going to make Europe much more productive and it's the future for us.

In terms of the biggest tech backers of companies here in Europe, and yours included, Peter Thiel, amongst your investors, does the kind of global volatility in markets have you worried about U.S. investors?

I think everybody should be kind of worried for the barriers that are created around the world now with the tariffs being considered. And all uncertainty that you have is never good for investment, especially long term. And everything investors do long term to invest into tech companies, it's normally a journey of 5, 10, 15, 20 years. And you need stability. And I think that's why

I think we need to make sure that there is more stability and there's less uncertainty. And I hope that politicians around the world keep that in mind when they take any actions on tariffs, on any other political decisions that might bring harm to consumers over the next years. Just briefly, you haven't picked up the phone to Peter Thiel, have you? I mean, he's a key supporter of J.D. Vance, the vice president. No, I haven't. OK, thank you very much. There are presentations.

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