Revolut co-founders Vladyslav Yatsenko and Nik Storonsky built one of Europe’s most valuable startups with venture capital. Now Storonsky believes a data-driven approach can disrupt that very industry.
revolution
The billionaire co-founder of one of Europe’s most valuable startups plans to launch his own venture fund, powered by artificial intelligence, to compete with “legacy” venture capital investors. Nik Storonsky himself will invest, along with other investors, around 200 million dollars in the Quantum Light Capital fund.
Storonsky will draw on his experience raising $1.8 billion to create fintech Revolut, which was valued at $33 billion in July 2021, and his previous career working as a quant trader for Lehman Brothers and Credit Suisse to use machine learning to identify startups. Up-and-coming series B and C companies. Storonsky, born in Russia and now a British citizen, says the club- and relationship-driven world of venture capital was outdated and waiting to be disrupted.
“Based on my experience as an entrepreneur over the last eight years, I found the product of venture capitalists quite frustrating,” says Storonsky, whose Revolut stake is worth $7.1 billion. “In bad times nobody wants to invest, in good times everybody wants to invest, so the lessons were that venture capitalists are quite unstable and there is some element of herd mentality.”
Storonsky has hired a team of six data scientists and engineers over the past year to scour LinkedIn, corporate archives and other databases to identify fast-growing startups. “Personally, I believe in having a model without having human judgment,” he says. “Different people have different opinions, and so you end up with this crowd mentality.”
Some venture capital funds, such as Social Capital in the US and EQT Ventures and Blossom Capital in Europe and the UK, have used similar approaches for years to spot and track potential new investments. “I’ve interviewed a lot of people from a lot of backgrounds and they just use data sources to identify breakouts, but this has nothing to do with machine learning,” says Storonsky.
Storonsky plans to hire a CEO to run the fund. He says the exposure to the fund and his existing angel investments helped him with his day job running Revolut. “I get all this new information about technology trends, who’s doing what, this is my advantage compared to traditional banking CEOs who aren’t part of the ecosystem,” he says.
Storonsky has previously made angel investments in Tink, a Swedish fintech startup acquired by Visa for $2.1 billion in June 2021, and French digital health company Alan, which raised $193 million at a $2.8 billion valuation in May. . The launch of the Quantum Light fund will likely pit its founders against venture funds such as SoftBank, Tiger Global and Balderton Capital, which had previously invested in Revolut.
Storonsky and co-founder Vladyslav Yatsenko, who is not involved in the fund, launched Revolut in 2015 as a travel currency card that allows customers to choose to pay in pounds or euros. The loss-making start-up now has more than 18 million customers and offers a dizzying array of services, from travel insurance, hotel booking, stock trading and crypto, in a bid to become Europe’s answer to “ super app” WeChat from China.
The next stage of Revolut’s expansion, which currently gives it a higher valuation than Barclays Bank, has seen it acquire banking licenses in at least 10 European countries and talk of a boost to remittances, mortgage lending and buy now, pay off debt products later. That growth has been accompanied by challenges in retaining staff and dealing with the UK’s financial watchdog. The Financial Conduct Authority has reportedly raised concerns about Revolut’s crypto trading product, which has played a role in a stalled application for a license to operate a British banking unit.