Revolut, the London-based digital banking startup founded just six years ago by Russian-born founder Nikolay Storonsky, raised $800 million from investors, who value the company at a whopping $33 billion, the company announced Thursday.
Revolut is now the U.K.’s most valuable fintech startup. Its 37-year-old founder, Nik Storonsky, who owns more than 20% of the company, is now worth an estimated $7.1 billion, up from $1.1 billion in March 2020. A spokesperson for Revolut did not respond to a request for comment on Storonsky’s net worth.
Softbank’s Vision Fund 2 led the funding round alongside Tiger Global. In a statement, Storonsky described the two firms’ investments as an endorsement of Revolut’s mission to create a “global financial superapp” that will allow customers to “manage all their financial needs through a single platform.” Adding, “We want our global app to offer customers 10x better value and 10x better service and security than they can achieve anywhere else.”
Revolut has seen its value rise 500% since it hit a $5.5 billion value in February 2020. Although customer growth continued, losses for the year ending December 2020 were up 57% to $217 million on revenues of $307 million, from $148 million in losses in 2019 on revenues of $229 million. Revolut continues to burn cash in pursuit of customer growth.
Karol Niewiadomski, senior investor at SoftBank said in a statement, “Revolut’s rate of innovation has redefined the role of financial services, placing [Revolut] at the forefront of Europe’s nascent neobanking sector. The company’s rapidly growing user base reflects a sustained demand for Revolut’s expanding suite of services.”
Revolut says it plans to use the new funding to support the expansion of its offering to U.S. customers and its entry to India and other international markets.
Rishi Sunak, the U.K.’s Chancellor of the Exchequer—the country’s second-most-senior politician, was also quoted in Revolut’s statement, saying, “It’s great news that Revolut has raised a further $800m and plans to expand further.” Adding, “We want to see even more great British Fintech success stories like Revolut.”
Growth And Losses
Revolut was the first of the U.K.’s so-called neobanks to mint a Forbes billionaire in founder Storonsky last year. Thursday’s announcement puts him alongside the founders of Stripe, Klarna and Checkout.com as fintech billionaires who have seen their fortunes grow since the pandemic forced a global lockdown in March 2020.
The growth story that attracted the likes of SoftBank and Tiger Global to Revolut is enticing. Between 2019 and 2020 Revolut’s bread-and-butter retail banking users grew from 10 million to 14.5 million, while business customers more than doubled, from 220,000 to 500,000. In 2020 Revolut won a banking licence for Lithuania and later in Poland giving the company a chance to “passport” the license and offer banking services more widely across Europe.
But the big challenge for Revolut and its leadership has been staff costs. Total staff costs rose from $82 million in 2019 to $235 million in 2020. In 2020 staff costs amounted to 74% of posted revenue. Revolut knows its weak spot. In an April 2020 Town Hall, Revolut announced to staff that it had lost “operating leverage” and was getting “fat and weak” in the process.
But investor funding continues to flow, part of a global trend. Crunchbase reported earlier this month that global venture capital funding in the first half of 2021 hit $288 billion invested worldwide, up by just under $110 billion compared to the previous half-year (also a record) that was just set in the second half of 2020.
The surge in funding and interest in fintech has led to a number of new European fintech billionaires, including Wise cofounders Kristo Käärmann and Taavet Hinrikus, Checkout.com founder Guillaume Pousaz and Klarna cofounders Sebastian Siemiatkowski and Victor Jacobsson.