French fintech startup Lydia is announcing that it has raised a $100 million Series C round. With this funding round, the startup has reached a unicorn valuation, which means that it is currently valued at more than $1 billion. Dragoneer and Echo Street are investing in the startup for the first time, and many of Lydia’s existing investors are putting more money on the table, such as Tencent, Accel and Founders Future. Times are changing. A few years ago, when a startup chose to raise from its existing investors, it usually meant that the team couldn’t find new investors. So existing investors would accept to put more money in the company in exchange for a lower valuation. But now, many VC firms have raised huge funds. Hedge funds are now investing in venture rounds. Investing in the most competitive startups have become harder. If a portfolio company is doing well, VC firms now usually want to double down on their previous investment.
Lydia was a peer-to-peer payment app. After adding your debit card and your bank details, you could send and receive mobile payments with other Lydia users. It progressively became the dominant mobile payment app in France. Over the last few years, the app has evolved quite a lot to become a financial super app with a wide range of features and financial products. Users can get a virtual or physical debit card that works on the Visa network. They can also manage their money more easily by creating sub-accounts that they can share with other Lydia users. Lydia has attracted 5.5 million users so far. Even more important, a third of French people who are 18 to 35 years old have a Lydia account. In other words, things are going well in France. And the startup now wants to go down the same road in other European countries. Lydia plans to hire 800 people over the coming three years, including 160 people in 2022 alone. By 2025, the company hopes that 10 million customers in Europe will use Lydia as their primary account.