Revolut on Tuesday said it had raised $500m (£385m) in new funding, valuing the London-based challenger bank at around $5.5bn.
The round of funding, which makes Revolut the UK’s most valuable fintech firm, was led by US-based private equity firm TCV. Many existing investors participated, Revolut said.
The company, one of Europe’s most prized digital banking upstarts, said it would use the money to strengthen its product development, roll-out banking operations in the continent, and increase daily engagement from its 10 million users.
The series D investment — the firm’s fourth major round of funding since it was founded in 2015 — pushes Revolut’s valuation beyond that of rival Monzo, which was valued at around £2bn in 2019.
Revolut has now raised a total of $836m (£644m). Among other services, the bank provides current accounts, money transfers, currency-exchange services, and commission-free stock trading tools.
Revolut said on Tuesday that it raised the funding on the back of “high” demand and customer engagement and its “strong” financial performance in 2019.
It said that it notched customer growth of 169% last year, and that the number of daily active users — considered a key measure of engagement for tech startups — surged by 380%.
The bank also pointed to a 354% increase in financial revenues in 2018. According to its most recently filed accounts, Revolut lost £32.8m ($42.6m) in 2018.
“Going forward, our focus is on rolling-out banking operations in Europe, increasing the number of people who use Revolut as their daily account, and striving towards profitability,” said Revolut chief executive and founder Nikolay Storonsky.
Revolut said it will also use the funding to further develop its premium subscription offerings, known as Premium and Metal.
The bank said that subscriptions had proven to be a “successful” revenue stream, noting that they grew by 154% last year.
TCV general partner John Doran said it was investing in Revolut because it believes its “truly exceptional customer experience” exceeded that which existing banks can offer.
“We look forward to supporting the team on their journey to build Revolut into one of the biggest financial services companies in the world,” Doran said.
“TCV has a long history of backing founders who are changing their industries on a global scale, so we are excited to partner with them as we prepare for the next stage of our journey,” said Storonsky, a former Credit Suisse (CS) trader.
The UK government on Tuesday said the haul was evidence that the UK fintech sector continues to thrive.
UK economic secretary and city minister John Glen said the announcement was “a clear indicator of our strength as a place for fintech business as we leave the EU.”
While Revolut may now be the UK’s most valuable fintech firm, it has experienced its fair share of problems.
In the wake of criticism of its work culture and the systems it uses for flagging suspect payments, the bank has been hiring executives with more traditional banking experience.
In July, the bank said that Metro Bank (MTRO.L) executive David MacLean would join the company as its new chief financial officer.
Martin Gilbert, the former co-chief executive of Standard Life Aberdeen (SLA.L), joined Revolut as chairman in November.