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LONDON: Revolut founder and chief executive Nik Storonsky had a simple message for staff at the company’s summer drinks party last year: Make the fintech company big and strong and beat the banks, according to a person who attended the event.
The nine-year-old fintech company is now valued at $45 billion after its employees sold shares to investors, making it more valuable than some of Europe’s largest banks, including 334-year-old Britain’s Barclays and NatWest.
The deal cements London-based Revolut’s position as Europe’s most valuable startup and is a testament to Storonsky, 40, who a few weeks ago won a U.K. banking license after a three-year campaign. The success enables Revolut to challenge established banks in more areas, such as mortgages.
Storonski’s stake in Revolut is currently worth about $8 billion, according to Reuters calculations based on his shareholdings disclosed in documents filed with Britain’s Companies House.
He is ranked 45th on The Sunday Times 2024 Rich List with a net worth of £4.38 billion ($5.7 billion).
Russian-born Storonsky, a former Lehman Brothers derivatives trader who also worked at Credit Suisse, left banking in 2013 to co-found Revolut, one of a wave of digital-only banking apps that aim to undercut mainstream lenders with low-fee products.
The idea for the company came to him during a trip when he was shocked by the high transaction fees and commissions charged by banks.
Since then, Storonsky, who studied physics and mathematics in Moscow, has ignored critics, the struggles of rival fintechs and a tough fundraising market — Revolut is valued at $45 billion, up 36% from $33 billion in 2021.
Such a valuation is eye-popping for a company that had $2.2 billion in revenue last year, and the recent market downturn shows that fintech companies’ lofty valuations can fall quickly.
Steve McLaughlin, founder of FT Partners and a bank advisor to Revolut for its 2021 funding round, said he believes Revolut is worth $100 billion, in part because the total addressable market for financial services is so huge.
“We did the analysis, we did the research, we projected where the company would be by 2040 — and everyone thought it was overvalued (in 2021), but it turns out who was wrong,” McLaughlin told Reuters.
Two sources familiar with Revolut said Storensky had been pushing for a valuation of more than $40 billion in recent months and told bankers he would not accept any deal that cashed out employee shares if conditions did not improve from 2021.
Revolut declined to comment.
Details and data
A former employee at last year’s drinks party said Storonsky is extremely detail-oriented and data-oriented, disliking lengthy emails and formality, and instead dressing casually and informally in a culture where every employee can be questioned by the CEO on the phone. While in London, he worked at a desk in the middle of Revolut’s open-plan office, said the person, who asked not to be named because the discussions are private.
However, Revolut’s work culture has drawn criticism from former employees, and the company has a high staff turnover rate.
Storonsky defended Revolut and said the company had learned its lessons. He hired big names in mainstream finance such as Martin Gilbert, the former co-CEO of Standard Life Aberdeen, as chairman and Michael Sherwood, a former Goldman Sachs banker.
A Revolut spokesman told Reuters the company takes “attracting, retaining and developing talent very seriously.” The spokesperson said the company’s complaints process complies with local law and is fair and transparent.
Former Revolut employees said Storonsky tightly controlled performance through an internal team of about 15-20 people who reported directly to him.
They are mostly under 35, come from banks or consulting firms and are given powerful individual responsibilities, such as handling underperforming departments, the person said.
Bigger Challenges
Revolut was unable to obtain a UK banking licence after it twice delayed publishing its full-year accounts as regulators scrutinised audit issues, a major setback for Storonsky.
In a 2023 interview with The Times, he criticised Britain as a place to do business and said he would choose New York over London if he went public.
Storonsky and Revolut may face a bigger challenge.
As the company uses its UK banking license to expand into other areas, it will face greater regulatory scrutiny.
The consumer watchdog has criticised Revolut’s performance in compensating fraudulent customers in the UK, saying it performed poorly compared with rivals. Revolut said it took fraud and scams “very seriously” and had strong protections in place.
For employees, especially those who joined Storonsky in the early years, the rewards have been huge, with many current and former employees becoming paper millionaires.
Storonsky said last week he was pleased that employees had sold $500 million worth of stock, realizing the company’s collective success.
But what is less clear is the extent to which the recent success and Storonsky’s ambitions will accelerate the company’s plans to list on the U.S. or London stock markets.
($1 = 0.7676 GBP)
(Additional reporting by Krystal Hu and Tom Wilson; Editing by Emelia Sithole-Matarise)
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