Lehman’s annoyed ex-trader builds $ 6.7 billion fortune with hot app

0


A spokesperson for Revolut declined to comment on Nikolay Storonsky’s shareholding.

Nikolay Storonsky took seven years to finally leave investment banking, working at Lehman Brothers and Credit Suisse Group AG in his twenties before leaving the industry in 2013.

“As a banker, I had already hit my peak,” Storonsky, who traded equity derivatives for the two banks in London, told Bloomberg four years later. “It got very boring.”

It was partly a professional malaise that prompted Storonsky, from Russia, to co-found Revolut Ltd., which provides online financial services. Last week, Revolut raised $ 800 million from investors, including SoftBank Group Corp. and Chase Coleman’s Tiger Global Management, for a valuation of $ 33 billion. At that level, Storonsky’s stake is worth around $ 6.7 billion, according to the Bloomberg Billionaires Index.

The latest funding will partly support Revolut’s expansion into the United States and entry into India, according to a company statement last week.

A Revolut spokesperson declined to comment on Storonsky’s shareholding.

The company’s valuation has grown six-fold since its last cycle in 2020 and is the latest fintech company to raise funds at an impressive valuation. In March, mobile payments company Stripe became the largest startup in the United States with a valuation of $ 95 billion following its latest fundraiser. Revolut’s local rival Wise Plc went public this month through a direct listing and now has a market value of around $ 13 billion, almost triple its valuation of a year ago. 12 months. This raised fears of a valuation bubble.

Rapid expansion

Revolut has grown rapidly since Storonsky, 36, launched it in 2015 with Vlad Yatsenko, a technology developer who worked for Deutsche Bank AG. It started with a prepaid debit card with no overseas transaction fees, but its services now include bank accounts, international money transfers, cryptocurrencies and stock trading, and payment tools from invoices and budgeting.

“The idea has always been to expand beyond foreign currencies,” Storonksy, a trained physicist, told Bloomberg in 2017. “We’re trying to launch as quickly as possible, the speed of it is much more important to prioritize than setting a goal for how badly we want it to grow. “

This gateway model has helped attract young users who have slowly started to expand their use of Revolut.

Owen Barron, 29, from Dublin, Ireland, started using Revolut in 2017. He liked the lower fees for foreign transactions and using ATMs abroad.

Now he uses the app every day.

“It’s like having Instagram or WhatsApp on your phone,” he said.

About 18 months ago, Barron started using another feature of the app: investing. His first business was in Microsoft Corp.

The only downside Barron sees with Revolut are the fees. He currently uses the free account, which limits withdrawals before the fees go into effect. In Ireland, he can make up to five ATM withdrawals or withdraw 200 euros ($ 236) – whichever comes first – before a 2% fee applies.

Premium features

Pedro Coelho pays 12.99 pounds ($ 18) for his Revolut account. His “Metal” membership gives him premium features, including 1% cash back in cryptocurrency, up to £ 800 in free ATM withdrawals, and unlimited commission-free trading. He says the latter benefit justifies the monthly cost.

Like Barron, Coelho, 25, was first drawn to Revolut by a single feature film. He needed to sell a junk Eurostar ticket in 2018 and the buyer wanted the funds through Revolut’s peer-to-peer money transfer service. Three years later, Coelho is now a paying customer in the company’s highest membership bracket.

Analysts wonder if more consumers will join him.

“We’ve never seen a strong appetite for consumers willing to pay monthly service fees,” said Jim Miller, executive general manager of banking and payments at research firm JD Power. “Maybe if it’s called a membership fee?” “

Miller also questions Revolut’s march towards new services. Traditional banks have long used chequing accounts as an opportunity to build a relationship with consumers, hoping they will eventually grow old in mortgages and insurance.

“I’ve been in financial services for over 30 years and all the time we’ve been talking about bringing the whole relationship together, the ‘financial supermarket’ approach. On the contrary, over time it just got easier. for consumers to extend their relationship, ”he said. “In a way, it almost logically organizes things in someone’s mind.”

Regulatory watch

Revolut’s ambitions have also placed it in the spotlight of regulators.

The UK’s financial watchdog investigated why in 2018 the company temporarily shut down a system designed to block suspicious transactions. Former staff members also spoke of issues, including burnout-inducing working conditions at Revolut, which hung a neon sign in its offices urging employees to “Get S – t Done!” , A reflection of Storonsky’s belief that the future of retail finance is a win-win race.

Yet these ambitions have largely paid off for Storonsky, Revolut’s largest individual shareholder. While he aims to make the company one of the largest financial services companies in the world, he is still wary of regulations in the banking world where he began his career.

“To cut corners, it’s just not possible in our environment,” Storonsky told Bloomberg in 2019.

–With help from Alastair Marsh, Silla Brush, Tom Metcalf, Stefania Spezzati, Andrew Heathcote and Alexander Sazonov.

(Except for the title, this story was not edited by NDTV staff and is posted from a syndicated feed.)


Leave A Reply

Your email address will not be published.