The fintech funding continues to roll in at a rapid pace, a result of the huge shift underway in how consumers spend and manage their money. In the latest development, Revolut — the London-based financial “super app” that provides banking, investing, currency transfer and other money management services to some 16 million users globally — this morning confirmed that it has raised $800 million. The company said that this Series E round of funding values Revolut at $33 billion.
This makes Revolut the most valuable fintech out of the U.K., as well as one of the biggest of the privately backed scaled-up startups not just in Europe, but the world. It’s also following in the footsteps of Klarna, the buy-now-pay-later startup out of Sweden that is also diversifying into a wider range of other services for consumers and the businesses that integrate it. Klarna last month raised $639 million valued at just under $46 billion. Stripe in the U.S. earlier this year raised at a $95 billion valuation.
This latest Series E is being co-led by Softbank Vision Fund 2 and Tiger Global, which appear to be the only backers in this round. It comes on the heels of rumors earlier this month Revolut was raising big. Revolut last raised about a year ago, when it closed out a Series D at $580 million, but what is stunning is how much its valuation has changed since then, growing 6x (it was $5.5 billion last year).
“SoftBank and Tiger Global’s investments are an endorsement of our mission to create a global financial super app that enables customers to manage all their financial needs through a single platform,” said Nikolay Storonsky, Revolut’s founder and CEO, in a statement.
As a further point of reference, when Revolut reported financial figures for 2020 last month, it noted that it made $361 million in revenue (£261 million) in the fiscal year, a 57% increase versus 2019 revenue of $229 million (£166 million). Gross profit in the period was $170 million (£123 million) last year, although it still operates at a net loss, with Q1 2020 racking up an adjusted operating loss of $76 million (£55 million), with $277 million (£200.6 million) in operating losses for the whole of the year. In other words, the big money being placed down now, and this big valuation, are long-term bets.
Revolut now has more than 16 million customers and sees over 150 million transactions/month, and the plan will be to bring on a wider range of services and promotions both to grow that base and to get its users putting more money and time into the app. That will also include exploring newer areas like insurance and a deeper dive into investing and trading, and likely a significant increase in credit services (which have been a big growth engine for other neobanks and financial tech companies). Revolut will also be doing more to build out its user bases in the U.S. and India, it said.
Like other “neobanks” that have emerged in recent years, Revolut has been built around the idea of tapping already built banking and financial services infrastructure, which it uses by way of APIs and integrates into its platform. Revolut then focuses on creating a slick and user-friendly experience both within its app and with its customer care.
The focus of Revolut’s technology, then, is to improve personalization, and to create new tools that aren’t as commoditized, such as budgeting tools and other financial management features.
“We believe Revolut’s superior customer experience and focus on rapid product development put the company in a strong position to continue scaling in both existing and new geographies,” said Scott Shleifer, partner, Tiger Global, in a statement. “We are excited to partner with Nik and the Revolut team as they build the next generation of financial services.”
This has particularly appealed to younger users, who not only are more comfortable using digital devices and mobile apps to carry out all of the work, leisure and practical aspects of their lives, but might be less experienced in all things finance.
It will be interesting to see how and if Revolut brings more core financial infrastructure into its app, or whether embedded finance reigns supreme. (Applying for a banking license as Revolut did earlier this year in the U.K. could be one sign of what it might build in the future. It’s also parted ways with some of its third-party providers over the years to build its own infrastructure.)
Revolut’s 2020 financial performance explains its big new $33B valuation
In the meantime, investors believe that there is plenty of room for developing technology in its current model.
“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,” said Karol Niewiadomski, senior investor for SoftBank Investment Advisers, in a statement. “We look forward to supporting Nikolay and the team in continued product innovation and bringing their services to new markets globally.”
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