Bored Ex-Lehman Trader Builds $ 6.7 Billion Fortune With A Hot App

A Revolut spokesman declined to comment on Nikolay Storonsky’s involvement.

It took Nikolay Storonsky seven years to leave investment banking for good. At 20, he worked for Lehman Brothers and Credit Suisse Group AG before leaving the industry in 2013.

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

It was partly because of professional malaise that Storonsky, originally from Russia, decided to use Revolut Ltd. Co-founding company that provides online financial services. Last week, Revolut raised $ 800 million from investors including SoftBank Group Corp. and Tiger Global Management by Chase Coleman, at 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 in part support Revolut’s expansion into the US and entry into India, according to a company statement last week.

A Revolut spokesman declined to comment on Storonsky’s stake.

The company’s valuation has increased six-fold since its last round in 2020 and is the newest financial technology company to raise money at a notable valuation. In March, mobile payments company Stripe became the largest startup in the United States after its final round of fundraising, valued at $ 95 billion. Revolut’s local rival, Wise Plc, went public through a direct listing this month and is now valued at about $ 13 billion, nearly three times its valuation from 12 months ago. That has raised some concerns about a valuation bubble.

Rapid expansion

Revolut has grown rapidly since Storonsky, 36, launched it in 2015 with Vlad Yatsenko, a technology developer who previously 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, cryptocurrency and stock trading, and billing and budgeting tools.

“The idea has always been to expand beyond the currency market,” Storonksy, a trained physicist, told Bloomberg in 2017. “We’re trying to start as soon as possible, how big do we want that to grow.”

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

Owen Barron, a 29-year-old from Dublin, Ireland, started Revolut in 2017. He liked the lower fees for international 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 began using another feature of the app: investing. His first trade was with Microsoft Corp.

The only downside Barron sees with Revolut is the fees. He currently uses the free account, which has limits on withdrawals before fees are due. In Ireland, they can withdraw up to five ATMs or withdraw € 200 (US $ 236), whichever comes first, before a 2% fee is charged.

Premium features

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

Like Barron, 25-year-old Coelho was first drawn to Revolut by a single feature. He had to sell an unwanted Eurostar ticket in 2018 and the buyer wanted the money through Revolut’s peer-to-peer money transfer service. Three years later, Coelho is now a paying customer in the company’s top tier.

Analysts wonder if more consumers will join him.

“We have never seen strong demand for consumers willing to pay a monthly service fee,” said Jim Miller, executive managing director of banking and payments at research firm JD Power. “Maybe if it’s membership fee?”

Miller also questions Revolut’s advance into new services. Traditional banks have long used checking accounts as an opportunity to build rapport with consumers in the hopes that at some point they will age into mortgages and insurance.

“I’ve been in the financial services industry for over 30 years and all along we’ve been talking about capturing the whole relationship, the ‘financial supermarket’ approach. If anything, it has become easier for consumers to spread their relationship during this period, “” he said. “In a way, it almost logically organizes things in someone’s head.”

Regulatory review

Revolut’s ambitions have also brought it into the focus of regulators.

UK financial regulators investigated why the company temporarily disabled a suspicious transaction blocking system in 2018. Former employees have also reported issues such as burnout-inducing working conditions at Revolut, which posted a neon sign in its offices instructing employees to “Get St Done!” Winner Take All Race.

Still, these ambitions have paid off for Storonsky, Revolut’s largest single shareholder. Looking to make the company one of the largest financial services companies in the world, he is still suspicious of the regulations in the banking world where he began his career.

“Making compromises is simply not possible in our environment,” Storonsky told Bloomberg in 2019.

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

(Except for the headline, this story has not been edited by NDTV staff and will be posted via a syndicated feed.)

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