Digital bank Varo announced NBA star Russell Westbrook as a lead investor in its latest $63 million funding round Thursday.
The Washington Wizards point guard, whose investment terms were not made public, will also join the neobank as an adviser with direct input into the direction of Varo's programs aimed at Black and underserved communities.
Varo's $63 million fundraise will be used to develop products and support its social impact mission, the bank said.
"The banking system has ignored or underserved a large portion of the American population — particularly communities of color," said Westbrook, who is Black. "I'm passionate about making lasting social change and creating a stronger and more inclusive system. I am excited and ready to work with Varo to be a part of an economic revitalization for those who never had the access they deserved."
Westbrook's representatives approached Varo in search of a partnership, the bank's chief brand officer, Halle Hutchison, said Thursday during Tearsheet's Acquire Conference.
"Russell was looking for a financial partner to help him get his message about financial literacy out there and somebody that could really materially help that with a product offering," she said. "This is so different than just a marketing agreement. He will have a material impact on how we progress as a company, the products we offer and the communities that we reach."
Varo is also partnering with Westbrook's philanthropic organization, Russell Westbrook Enterprises, to co-create an impact program, Hutchison said.
"It will very likely start local, but the goal would be for it to go national," she said.
Westbrook's partnership with the San Francisco-based bank, which the Office of the Comptroller of the Currency (OCC) approved last July for a national charter, follows a multimillion-dollar ad campaign that aired TV spots in seven markets during the Super Bowl.
Hutchison said Varo's "A bank for all of us" campaign represents the company's effort to become a lifestyle brand.
"From a business standpoint, you have to compare yourselves to similar brands and similar product offerings, but from a brand standpoint, we really want to reach higher than that and become a brand that people are proud to be associated with beyond finances," Hutchison said. "There's a sense of solidarity that people get with lifestyle or mission brands. And that's really our aspiration."
Varo's move beyond Google and Facebook advertising will help the bank gain a more loyal customer base, Hutchison said.
"By telling your brand story, you proactively bring in customers that make a more deliberate choice to associate themselves with the brand," she said. "If you start out with what I call 'buy me now' product messaging, you can acquire customers, but they're usually much more fickle. By telling the brand's story and establishing this narrative that they can put all of the other proof points in or under, you get a much higher-value customer."
The bank, Hutchison said, is also advertising during another widely viewed TV event: the season finale of "The Bachelor."
"Varo's target is up to 90% of America. We have a very broad audience to reach," she said. "You pick things where you're going to get the most people seeing it."
Varo doubled its customers in 2020, and now has nearly 2 million accounts, Reuters reported last month.
As digital banks compete for accounts, many are turning to influencers and celebrities to help reach new customers.
Digital bank Step raised $50 million in a Series B funding round led by Coate Management in December, with new investors singer Justin Timberlake and music group The Chainsmokers joining returning investors Stripe, Crosslink Capital, Collaborative Fund and actor Will Smith's Dreamers VC.
Step, which is aimed at the Gen Z market, also gained investment from current and retired sports stars such as Eli Manning, Andre Iguodala, Larry Fitzgerald and Kelvin Beachum, as well as TikTok star Charli D'Amelio, who will use her platform to promote the digital bank to her more than 100 million followers, the company said.
Chime, the nation's largest digital bank, which has more than 12 million followers, according to an estimate by Cornerstone Advisors, struck a multiyear sponsorship deal with the NBA's Dallas Mavericks last year. Chime's logo appears on the upper left shoulder area of all Mavs jerseys.
Yet-to-be launched Greenwood, an Atlanta-based challenger bank targeting Black and Latinx communities, has also recognized the value of celebrity reach.
The neobank, launched by entrepreneur and Bounce TV founder Ryan Glover, civil rights leader Andrew Young and rapper and activist Michael "Killer Mike" Render, has attracted investment from "Grey's Anatomy" star Jesse Williams, who has produced and starred in a series of videos promoting the startup.
Glover said he thinks the platform, which is expected to launch in May or June, is on track to hit more than 600,000 active accounts by the end of the year.