LONDON — Investors in startup bank Tandem stepped in to provide an emergency cash injection for the startup earlier this year when a funding deal collapsed.
Tandem’s investors put £3.6 million into the company in April, documents filed with Companies House on Friday show. The investment came after a £35 million investment from House of Fraser fell through at the end of March after only £6 million had been received.
Investors who put money in received a big discount on Tandem’s share price. Tandem, which has not yet launched to the public, sold shares to House of Fraser at £15.20 in December but investors who stepped in to help in April bought shares for £5.56 — almost a third of December’s price.
A spokesperson for Tandem told Business Insider:
“The share filing that has just been undertaken relates to an investment that existing investors made in Tandem immediately after the funding from House of Fraser was cancelled due to uncertainty about whether China’s State Administration of Foreign Exchange would approve the transaction.
“The investment was made at short notice at a time when Tandem had a less certain future than it had previously. The fact that existing investors continued to support the business demonstrates their faith in its potential, but Tandem decided that it was appropriate to offer a discounted price given the circumstances.”
The spokesperson wouldn’t give details on which specific investors backed Tandem in the fundraising. Tandem has raised over £25 million to date from investors including eBay founder Pierre Omidyar, Route 66 Ventures, and e.ventures. The banking startup also raised £1 million through crowdfunding on Seedrs last year.
The funding setback led Tandem to lose its banking license as it no longer met capital requirements. The startup, founded in 2014, also reduced total staffing numbers from around 120 to 80.
Tandem announced earlier this week that it is buying loss-making Harrods Bank, a deal that will see Harrods’ Qatari owners inject £80 million of new capital. Tandem said in a blog post announcing the deal that the transaction means its “future is secured.”
Tandem’s funding setback and licensing issue have delayed the launch of its savings account, but Tandem said this week that the deal should help accelerate the launch, allowing it to happen by the end of the year.
Last month Tandem launched its app to its community of “co-founders.” It allows people to view all their bank accounts in one place and monitor spending. Tandem is also testing its credit cards internally, with plans to launch to the public later this year.
Tandem, founded in 2014, is one of a number of app-only banks set up in Britain in recent years. Others include Monzo, Atom, and Starling.