[LONDON] The "global banking alternative" Revolut has raised US$66 million in a fund-raising round, the start-up said on Wednesday, in the latest sign that London is so far weathering Brexit to remain a global financial-technology centre.
Led by Europe- and San Francisco-based venture capital fund Index Ventures, the fund-raising round was one of the biggest ever Series B rounds in Europe. It should provide some comfort to the British capitol as it jostles to hold onto its reputation as Europe's leading hub for the nascent fintech sector.
The investment dwarfs the 19.5 million pounds (S$34.6 million) raised by London-based rival Monzo in its Series B round earlier this year.
Revolut, which has around 700,000 customers, over 400,000 of them based in Britain, provides payment cards that can be used abroad to pay for goods and services at the exchange rate used by banks anywhere that Mastercard is accepted.
Other start-ups, such as Monzo and Germany's N26, offer similar products, but Revolut says it is distinctive in offering interbank exchange rates, zero-fee international money transfers, and in allowing customers to hold and exchange up to 16 different currencies in their app-based accounts.
Revolut was set up in July 2015 by Russian-born Nikolay Storonsky, who first moved to London in 2007 to work for Lehman Bros as a derivatives trader and later also worked for Credit Suisse.If he were starting the company now, as Britain heads out of the European Union, Mr Storonsky would still choose London as its base, he said. "I don't see any problems with Brexit," he told Reuters.
"London is much more international than anywhere else in Europe, (and) in terms of regulation, it's a great place to be." Some fintech firms are worried about losing "passporting"rights, which give companies licenced in one EU country the right to trade freely in any other. But Mr Storonsky, whose firm has a UK e-money license, said if that happens it would only take a few months to get such a license for the rest of the EU.
Mr Storonsky, 34, said he wanted to set up a business that acted like a bank but had less bureaucracy. "I just don't like banks," he said. "They're so bureaucratic, with so many managers not really doing anything ... If you fired 80 per cent of bankers, nothing would change."
Revolut also announced that it is adding digital currency bitcoin to its app in response to high demand from customers. Users will now be able to hold, exchange, spend and transfer bitcoin the same way they use other currencies. Rival cryptocurrencies Ether and Litecoin will soon be added.
Revolut, whose license does not allow it to invest clients'money, gets revenue from commissions paid by merchants, from users who change more than 5000 euros (S$7,922) per month and from add-ons such as insurance, which is provided by third parties through the app. It is not yet profitable, but that does not worry its founder.
"It's normal at this point for a start-up - this is how billion-dollar companies are being made now," Mr Storonsky said.The firm had intended on breaking even by November, but it now says that will take longer, because it is using the extra funding to expand the company into the United States and Asia.
Revolut also secured more money from London-based Balderton Capital and Californian Ribbit Capital. The latest cash injection takes its total investment so far to US$83 million. It will run a further US$5 million crowdfunding campaign this month.