London startup Revolut became the capital’s latest firm to attract venture funding for its fintech (financial technology) platform today as it announced a £1.5 million funding round led by European investor Balderton Capital.
Revolut’s technology allows people to transfer money through a smartphone app without incurring the fees that banks and other financial services levy on consumers as they travel. Every year people in the UK fork out $1.67 billion (£1 billion) a year as they spend and send money abroad, according to Revolut.
The Revolut app, available on iOS and Android, works in tandem with a free prepaid MasterCard that can be ordered through the app after the user has set up their account.
The card can be used globally with no fees when the customer spends or withdraws cash from an ATM.
Nikolay Storonsky, founder and CEO of Revolut, said: “Revolut has an ambition to change the way money is transacted, sent and spent around the world. We are proud and delighted to introduce the world’s best-value digital currency exchange service. The app and card are intuitive to use, free for all and offer customers the peace of mind that, with Revolut, you can use your money across borders at unbeatable value.”
King’s Cross headquartered Balderton Capital raised over $305 million (£195 million) last year for its European investment fund and it’s using that money to get behind the likes of Nutmeg, Zopa, Crowdcube and Credit Benchmark and many other fintech firms.
Balderton is one of many venture capital firms throwing millions of pounds at fintech companies in London, as it looks to piggyback on their success.
Global investment in fintech ventures tripled from $4.05 billion (£2.6 billion) in 2013 to $12.2 billion (£7.8 billion) in 2014, with Europe the fastest growing region in the world, according to a report by IT outsourcing and consultancy firm Accenture.
Daniel Waterhouse, general partner at Balderton, said: "As you probably know, we have a long history of investing in the fintech category and a very deep understanding of it. We spend a lot of time looking at companies in all sorts of areas and clearly the foreign currency market is interesting as consumers have been paying pretty ridiculous fees and costs on currency conversion in the past."
Waterhouse, who holds a PhD in applied mathematics from Oxford University, added: "We looked at lots of players and when we saw Revolut we thought, 'wow, this has really cracked it in terms of what it does and the user experience.'"
Peer-to-peer money transfer service Transferwise, another well known London fintech firm, offers a similar service but Waterhouse claims Revolut is broader in what it offers.
"Revolut can remit stuff and send money to other people, but the primary use cases are going to be spending money in a foreign currency, so when I go on holiday and want to pay foreign bills or transfer money from the UK to my US bank account I can do that from the phone in my pocket."