Chime chases $11 billion valuation in IPO set for next week on Nasdaq

Chime Financial on Monday kicked off the roadshow for its much anticipated IPO that could value the neobank at roughly $11 billion, a more than 50% drop from its $25 billion valuation in 2021. Chime is scheduled to begin trading on the Nasdaq on Thursday, June 12.  

The impending IPO will offer 32 million shares at a price range of $24 to $26 each, according to a June 2 regulatory filing. (About 26 million is coming from Chime itself while stockholders are providing an additional 6 million.) At the top of its expected range, Chime could raise as much as $832 million.

In 2021, Chime was one of the buzziest fintech unicorns when it was valued at $25 billion but valuations of fintech firms, along with venture funding, have plummeted since then. On an undiluted basis, Chime is targeting a market value of $9.47 billion. But when Chime includes items such as stock options and restricted stock units, or RSUs, its valuation jumps to about $11 billion on a fully diluted basis. Fourteen banks are listed as working on the Chime’s IPO with Morgan Stanley, Goldman Sachs and JPMorgan serving as lead underwriters on the deal.

Chime’s offering comes at a time when the IPO market, which has crawled since 2021, is on an upswing. Circle Internet Group, which is going public later this week, increased the size of its deal and price range Monday. Circle is now looking to sell 32 million shares at $27 to $28 each, up from 24 million at $24 to $26 each. Circle, which could raise as much as $896 million, is now targeting a $7.2 billion valuation.

When a company increases the size of its offering and raises its price range, this typically signals strong investor demand. Circle’s IPO is said to be oversubscribed, and the company is scheduled to price the deal on Wednesday and trade Thursday.

Early investors set to cash out

Founded in 2012, Chime offers traditional financial services, like fee-free checking and savings accounts, to lower income U.S. consumers that earn up to $100,000 a year. The startup had 8.6 million active members as of March 31, with two-thirds relying on Chime as their primary bank, according to a regulatory filing. Roughly 70% of its members use Chime to buy food, groceries, gas and utilities. As of March 31, the startup employed 1,465 workers, or “Chimers,” spread across three offices, including one-third in San Francisco.

Chris Britt, Chime’s cofounder and CEO, owns the largest stake in the fintech and will have 39% of total voting power after the IPO is completed, according to the SEC filing. Ryan King, also a cofounder and Chime board member, will have about 35.5% of voting power. Neither is selling shares.

Investors DST Global, which led Chime’s $200 million round in 2019, will have 5.4% total voting power after the offering is completed, while Crosslink Capital will own 3% and General Atlantic will have 2%. They are also not selling shares.

Among the sellers is VC firm Cathay Innovation, which is off loading the biggest chunk of stock, 3.75 million shares, and will have a 1.2% voting stake after the IPO. Cathay could make as much as $97.5 million. The regulatory filing also lists Jay McGraw, who is apparently the TV producer and son of Dr. Phil McGraw or “Dr. Phil.” McGraw is selling 350,000 shares and at $26, he could reap $9.1 million. McGraw could not immediately be reached for comment.

This story was originally featured on Fortune.com