Digital Bank Revolut closes $800 million in new funding round, now valued at $33B

Digital bank and fintech firm Revolut disclosed on Thursday that it successfully raised $800 million in a funding round led by SoftBank and Tiger Global.

The funding round was endorsed by Britain’s finance minister Rishi Sunak, who encourages such events and wants to see the UK fintech industry grow which would also help sustain the financial sector since the country’s departure from the European Union.

“We want to see even more great British Fintech success stories like Revolut,” Sunak said.

The digital banking and trading service is now valued at $33 billion, six times its worth a year ago at $5.5 billion. The round was led by Japanese SoftBank and U.S. Tiger Global which hold less than 5% stake in the company, collectively.  

The latest funding round places Revolut as the second-largest fintech private startup in Europe, after fintech giant Klarna, according to CB Insights. Revolut now ranks as the biggest fintech firm in the U.K., beating Checkout.com.

Revolut said it would invest the newly raised fund in marketing, product development, and international expansion, the company’s CFO Mikko Salovaara told reporters on Thursday. Adding that the firm is very focused on expanding its reach in the United States and India.

In 2020, Revolut reported annual losses of £167.8 million ($231.9 million), about £106 million higher than what the company lost in the previous year. The company’s revenue was £222.1 million last year. With its current valuation, Revolut is worth more than five times its market value and 100 times its last year’s sales.

Revolut’s boost came towards the end of 2020 and was “strongly profitable” in the first quarter of this year, Solvaara said. As such, the company is hoping to become even more profitable in the coming quarters. It is banking on its expansion into new services such as stock trading, business accounts, and crypto, CEO and co-founder Nik Storonsky told CNBC.

According to data from CB Insights, fintechs have received the most investments this year, raising $33.7 billion only in the second quarter of 2021.

Salovaara said the firm doesn’t plan for an initial public offering immediately, considering it just raised a sizeable amount in the round. He suggested a possible IPO was in view but was unlikely this year. Questions of whether Revolut will go public come amid other fintechs’ plans to go public. Last week, money transfer firm Wise, went public on the London Stock Exchange, becoming the biggest tech listing by market cap.

“We think eventually we will be a public company but have no immediate plans to list,” Salovaara said.

Since its founding in 2015, Revolut has offered more than 16 million customers products including foreign exchange, stock trading, cryptocurrencies, at lower rates compared to mainstream bank’s rates.