Soldo, the London-based fintech startup that offers a multi-user spending account primarily for businesses, has secured an Electronic Money Institution licence from Ireland’s Central Bank, a move the company says is designed to mitigate against the uncertainty of Brexit.
The Accel-backed company is currently licensed by U.K. financial regulator the FCA and benefits from so-called “passporting,” European Union regulation that lets a company regulated in one EU country offer financial services across the whole of the EU and other EAA countries. That arrangement could come to an abrupt end post-Brexit, leaving Soldo unable to service its European customers, which it says represents half of its business.
Explains Soldo: “The E-Money licence enables Soldo to operate its services smoothly during a time of unprecedented turbulence in the business and political sphere and demonstrates the company’s commitment to providing uninterrupted enterprise level financial technology services for businesses of all sizes. With the licence the company will be able to issue payments in Ireland across the European Union under passporting rights.”
Furthermore, in a move that Soldo says will ensure it is Brexit-ready whatever the outcome of ongoing Brexit talks, the company plans to migrate to Ireland the accounts of its EU customers, as well as the team that supports them, from its U.K.-regulated E-Money Institution.
“It’s crazy to think we’ve been forced to work for a year and a half on a hugely complex project, mostly duplicating something that we had already, to prepare our business for something that may or may not happen,” says Soldo co-founder and CEO Carlo Gualandri.
In an email, Gualandri told me he chose Ireland because it was a recognised jurisdiction with a “high reputation,” and has the benefit of being an English language country with a similar legal system to the U.K. and strong ties to the U.K., where Soldo is headquartered.
Asked how much of Soldo’s staff will be moved to Ireland, Gualandri says that after March — the official Brexit deadline — all of the company’s financial services activities related to EU market customers will be managed from Ireland, meaning that the new Irish team will quickly grow to around 10 people, a mixture of relocations and new hires.
“Given that we will continue to serve the U.K. from our FCA-regulated entity initially, all this will just be a duplication, but over time as we expand in Europe most of the personnel growth in our financial services organisation will happen in Dublin,” he adds. “All this would have been based in London but Brexit forced us to change our plans because in a regulated business the people must be located where you are legally established.”
And although Gualandri says he is “delighted” to have passed the robust checks that an Irish license entails, there are a number of other uncertainties related to Brexit that could heavily affect the business. They include issues around data transfer and processing, taxation and, of course, freedom of movement or the ability to hire talent from abroad.
“We have a diverse workforce with a lot of internal mobility and that will become much more difficult if not impossible,” he tells me. “I actually just did the process to obtain settled status myself (and my family) and luckily I have been in the U.K. for quite a long time but some of our younger people are much less confident.”
Given all of the above, does Gualandri have a message for the U.K. government?
“My message to the U.K. government would be this: We just spent a huge amount of time, energy and money (that as a startup is a very very scarce resource) to be ready for Brexit but we don’t know if it will ever happen, or if yes, how and when. So if it happens I’ll be relieved to have done the right thing for the business even though I’ll personally be very sad as a person living in this country. If it doesn’t happen I’ll be personally happy but I’ll have to face the responsibility that I have wasted my company’s time and money by doing the ‘proper’ thing.
“How can we have come to the point where something so big and impactful on the country and the lives of everybody has been managed without any level of planning whatsoever. It is hard to believe this has happened and is still happening today.”