This article is part of Wellesley Hills Financial’s Market Movements series, found in our weekly newsletter.
Neobank, Revolut, raised $800 million last week as part of a Series E financing round led by SoftBank Vision Fund II and Tiger Global Management. The Series E round closed with an implied valuation of $33 billion, earning Revolut the designation of the most valuable privately held company within the United Kingdom. The $33 billion valuation reflects a dramatic increase from a $5.2 billion valuation assigned to the company late last year as part of its Series D financing round.
Founded in 2015, London-based Revolut began as a digital-only banking and payments platform, allowing its users to spend money abroad without the hassle of currency exchange fees. While the company’s multi-currency payment card was not quite a revolution in technology, secular trends such as the democratization of travel (greater accessibility and affordability) and financial services provided the company with strong tailwinds to navigate its strategic vision. Today, the company has positioned itself as a true neobank, targeting the continent’s younger demographic through the use of a slick smartphone app and colorfully designed bank cards. The firm’s long-term vision for its technology is the formation of a ‘Super App’: a closed ecosystem of seamlessly integrated applications which allow users to navigate all facets of their daily finances. The ‘Super App’ model has most recently gained notoriety in Asia with companies such as ‘Grab and GoTo’ in the southeast, and Alibaba and Tencent in China.
The newest development in Revolut’s quest to form a ‘Super App’ is its new feature ‘Stays’. While initially available only in the UK, ‘Stays’ turns the traditional travel booking model on its head, offering $0 booking fees and 10% cashback on all bookings. ‘Stays’ marks Revolut’s first product offering outside the financial services industry and puts it in direct competition with travel industry giants such as Booking Holdings, Expedia and TripAdvisor.
The lofty valuation assigned to Revolut is not only indicative of its disruptive consumer finance and payment solutions offered by the company, but the euphoria surrounding open banking and financial technology at large. While Revolut’s investors maintain that there are no plans to go public in the near term, it would be unusual, and perhaps remiss of them, not to take some chips off the table while the market is still hot.