Revolut prepares for $500m employee share sale

Revolut, one of the UK’s most valuable fintech startups, is expected to allow employees to sell their company shares later this year, in a deal that could be worth half-a-billion dollars. Morgan Stanley, the Wall Street bank, will reportedly manage the sale.

Founded in 2015, Revolut has grown rapidly to employ around 10,000 workers. It reached unicorn status in 2018, and we named it our winner in the 2019 Sartups 100 Index one year later.

However, according to Sky News, investor appetite for Revolut has struggled to maintain the pace of its relentless expansion. Likely, the planned share sale (also known as a secondary sale) is a way to quickly boost Revolut’s value in order to facilitate further growth.

Revolut seeks revival

Back in 2021, the world was experiencing a fintech boom. Investors seeking to cash in on the wave poured money into London-based Revolut, which secured it a $33bn valuation in Series E funding.

The cash injection helped to identify Revolut, which now services 40 million customers worldwide, as one of the UK’s most successful startups. 

Since then, however, turbulent market conditions have led to a decline in fintech funding, and Revolut is struggling to live up to its previous cost assessment. Bloomberg reported in April that the business’ worth has fallen to $25.7bn (although this is up from $17.7bn in 2023).

Co-founder and chief executive, Nik Storonsky, is now apparently seeking a return to Revolut’s previous valuation through the secondary sale. 

Also known as a liquidity round, this type of sale allows company shareholders to sell their stock in order to quickly turn assets into cash and increase the company’s value. Revolut last conducted a secondary share sale back in 2021, after its successful Series E funding.

Licensing woes

Revolut’s pricing woes have been compounded by difficulties it has faced to secure a banking licence. Last June, the brand was cautioned by regulators after £477m (around 75% of its revenue) was found to be unaccounted for in company statements.

Storonsky has maintained that the challenges are due to red tape. In an interview with the Financial Times last May, he said: “ultimately it is not really [Revout], it is generally the banking crisis we see at the moment that makes regulators extra cautious.”

Delays to Revolut’s regulatory journey have doubtless created issues for its expansion within the UK, however. In the same month, Storonsky suggested the brand would not consider listing in London if it launched an Initial Public Offering (IPO), as a result of the trouble.

“In the UK there are higher taxes to pay and an extremely bureaucratic regulator,” he told The Times.

Revolut vs Monzo rivalry amps up

Revolut bosses could be feeling pressure from fellow challenger bank brand and Startups 100 alumni, Monzo, which raised £340m in funding earlier this year. 

Back when Revolut was being valued at $33bn, Monzo trailed behind with an estimated worth of $4.5bn. Following the investment, though, Monzo’s overall valuation rose to $5bn.

This has perhaps raised concerns that Monzo’s growth could supersede Revolut’s in the UK. Monzo was granted a full banking licence by the Financial Conduct Authority (FCA) in 2017.

Commenting on the funding, Monzo said: “Many are finding it difficult to raise funding and even growing businesses are seeing valuations fall. Raising capital from respected investors in this climate is a strong result that makes us a significant outlier in the market.”

It’s telling that even following a 22% decline in its valuation between 2021 and today, Revolut still ranks among the world’s fastest-growing fintech businesses. Sky News reports that unreleased financial figures show its revenue doubled last year to an estimated £1.7bn.