Revolut app: how a former Lehman trader got bored building a $ 6.7 billion fortune

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.

A spokesperson for Revolut declined to comment on its 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 foreign transaction fees, but its services now include bank accounts, international money transfers, cryptocurrencies and stock transactions, as well as bill payment and budgeting tools. .

“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 transactions. 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 note 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.