The digital bank Revolut has become the UK’s most valuable financial technology startup after a funding round that more than tripled its value to £4.2bn.
The valuation puts it ahead of rival digital bank Monzo, which was valued at £2bn last year, and that of small business lender OakNorth, which previously held the top spot at £2.2bn.
It comes after Revolut, which is headquartered in London, announced it had raised $500m (£387m) from a group of investors led by the US fund Technology Crossover Ventures, ending months of speculation around the deal. TCV was an early backer of companies including Airbnb, Netflix and Spotify.
The cash injection means Revolut is now worth more than triple its previous valuation of £1.3bn in spring 2018, and marks a speedy rise for the company launched in 2015 with a pre-paid card product focused on offering free currency exchange to customers.
Now, from its head office in Canary Wharf, the company has expanded into UK current accounts, business banking, cryptocurrency and stock trading, and has 10 million customers worldwide.
Across 23 global offices it employs about 2,000 staff, 500 of whom are based in Canary Wharf. It has about 1,000 staff at its Krakow base in Poland.
But like its rivals – including Monzo and Starling – Revolut has not yet made a profit and does not expect to do so any time soon. It reported a pre-tax loss of £33m in 2018, more than double the £15m loss a year earlier.
Revolut has faced controversy over its treatment of staff and the founder’s alleged connections to the Kremlin.
Russian-born Nik Storonsky was a trader at Lehman Brothers and Credit Suisse before launching Revolut. But his background came under scrutiny after it emerged that his father was director at a division of the Russian natural gas group Gazprom, which has been under US sanctions since Russia’s annexation of Crimea in 2014.
The connection sparked controversy in Lithuania, the former Soviet state through which Revolut has routed its EU banking licence. Last spring, Lithuanian politicians called for an investigation into the company (paywall), citing national security concerns. Stornsky has long denied any Kremlin links, and has written an open letter warning that “fearmongering is not something that should be taken lightly”.
Around the same time, reports emerged that Revolut employees were being forced to do unpaid work and were set unachievable targets, leading to high staff turnover. A spokesperson told Wired magazine the company’s culture was changing “as rapidly as our business”, adding that staff turnover was less than 3%.
The bank has tried to bolster its reputation with a string of high-profile appointments, including the former Standard Aberdeen chief executive Martin Gilbert as chairman. In July it poached the chief operating officer of HSBC’s commercial banking division, Richard Davies.
Commenting on the fresh funding round, Storonsky said: “Going forward, our focus is on rolling out banking operations in Europe, increasing the number of people who use Revolut as their daily account, and striving towards profitability. TCV has a long history of backing founders who are changing their industries on a global scale, so we are excited to partner with them as we prepare for the next stage of our journey.”