Early backers of UK fintech Revolut who invested in the company via crowdfunding platforms have seen the value of their stakes increase by 40,000% after the company confirmed a new $45bn valuation on Friday.
Some of them have seen the paper value of their investments (a term used to describe the worth of holdings in private companies, which can only be turned into actual money at the point of an exit event) soar to more than $1m, according to Matt Cooper, co-CEO of crowdfunding platform Crowdcube.
“It’s a pretty unprecedented event in UK and European tech,” says Crowdcube co-CEO Matt Cooper in an interview with Sifted. “Retail investors and early users weren’t able to invest in some of the other most valuable companies to come out of Europe such as Spotify.”
In 2016, a small group of early Revolut users were allowed to invest in the business at a £40m valuation through Crowdcube. A total of 433 investors took a punt on the barely-one-year-old fintech, putting in tickets ranging from £100 to a maximum of £5k, with the fintech offering a maximum allocation of £1m.
“When we reached that allocation, the round shut,” explains Cooper. “So it really was first come first served — and it was the 433 people who got in the quickest who were the lucky ones.”
Crowdfunding gains and losses
While Cooper declined to share the exact amounts invested by crowdfunders, he says on the platform they typically invest £1,000 — which would now be worth just shy of $500k.
And those with enough guts to invest the maximum permitted amount into the fintech, which reported £2.4m in revenue in 2016, will now hold shares worth more than $2m.
Revolut later raised another £3.8m on startup funding platform Republic Europe (previously Seedrs) in 2017 from more than 4,000 investors at a £275.9m pre-money valuation. While some of those backers were given the chance to liquidate their positions via Republic’s secondaries service, a company spokesperson says that many who’ve held onto shares are sitting on a 100x gain.
If Revolut were to exit via an IPO, giving these early backers the chance to sell their shares, it would be the latest in a string of wins for retail investors backing fintech startups.
Investment platform Nutmeg sought crowdfunding in 2019 and was later acquired by JPMorgan in 2021 for £700m. GoHenry, a banking app aimed at young people and children, raised four crowdfunding rounds between 2016 and 2019 and was acquired last year by US investment startup Acorns.
That’s not to say that retail investment into fledgling venture-backed companies don’t come with risks — companies backed with crowdsourced capital can and have fallen into administration previously — and there’s no guarantee that investors will see any upside to their investments. In March last year, London-based sustainable investment platform Clim8 — which raised more than £4m from Crowdcube investors — shut down, leaving retail investors empty-handed.
Read the orginal article: https://sifted.eu/articles/revolut-crowdfund-investment-fintech/
