British digital banking giant Revolut has today revealed the close of $500m (£387m) in additional funding, making it tied with Klarna as the most valuable privately held fintech firm in Europe at $5.5bn.
The funding, which was led by new investor TCV, takes Revolut’s total amount raised to date to $836m. TCV, a Silicon Valley-based growth venture capital giant, is known for its early investment in Netflix and taking stakes in the likes of Airbnb, Facebook and Spotify.
Existing backers also participated, including Ribbit Capital, DST Global and Sprints.
People familiar with the matter told City A.M. that Revolut first began shopping the round in early 2019 but ran into obstacles with investors, after a spate of negative reports about the company’s workplace culture and anti-fraud practices. The tech firm, which now employs more than 2,000 people, held talks with Japanese mega investor Softbank about participating in the round, but those discussions later broke down.
A spokesperson for Revolut said the firm only “truly focused” its attention on raising funding at the end of last year.
Revolut said it increased customer growth by 169 per cent in 2019, while the number of daily active users rose 380 per cent. Its most recent financial accounts showed revenue growth of 354 per cent to £58.2m in 2018, and an operating loss of £32.8m.
The company has undertaken a number of costly expansion endeavours as it seeks to gain a competitive edge on rivals Monzo and Starling Bank, launching in the US late last year. Revolut said it will use today’s capital to fuel that expansion, with a particular focus on encouraging daily use of its personal and business banking accounts.
In time it plans to offer lending services and extend the rollout of its high-interest savings accounts and banking services across Europe. Revolut also said it will work on its customer service, following reports of complaints of a failure to prioritise efficient communication with its users and technical outages.
In a bid to turn around its image and oversight, Revolut revamped its leadership last year. City veteran Martin Gilbert was made the company’s first chairman, while two former executives from Deloitte and Silicon Valley Bank were added to the board as non-executive directors.
Chief executive and co-founder Nikolay Storonsky said the investment “demonstrates investor confidence in our business model”.
“Going forward, our focus is on rolling-out banking operations in Europe, increasing the number of people who use Revolut as their daily account, and striving towards profitability. TCV has a long history of backing founders who are changing their industries on a global scale, so we are excited to partner with them as we prepare for the next stage of our journey,” he added.
The scaleup briefly achieved month-on-month profitability in 2018, but subsequent expansion efforts have led to mounting losses.