Venture capital firm Molten Ventures has taken a significant hit by writing down its stake in fintech company Revolut by 40%. This development adds to Revolut’s existing challenges as it continues to face difficulties in obtaining a banking license in the UK.
The write-down by Molten Ventures follows similar actions taken by other investors, such as Schroders, which devalued its investment in Revolut by approximately 46% in April. These recent events highlight the concerns surrounding Revolut’s path to profitability and regulatory hurdles.
Molten Ventures’ Write-Down
Molten Ventures has discounted the value of its £7 million stake in Revolut from £91.3 million in March of last year to £54.5 million at the end of March this year. The venture capital firm has faced a tough year in the midst of a tech stock sell-off, reporting a loss of £243 million in a recent trading update, compared to a profit of £301 million in 2022. Molten Ventures’ CEO, Martin Davis, attributes the write-down to market concerns regarding Revolut’s struggles to secure a UK banking license and achieve profitability.
Revolut’s Challenges with UK Banking License
Revolut has been actively campaigning for a UK banking license for the past two years. However, recent reports suggest that the company’s application could be in jeopardy as regulators express concerns over its balance sheet. After a six-month delay, Revolut finally filed its accounts in March. However, auditor BDO raised concerns about its ability to verify £477 million in revenue and questioned the completeness and occurrence of the reported figures due to Revolut’s internal IT systems’ configuration.
Impact on Revolut
The write-downs by Molten Ventures and Schroders indicate the growing skepticism surrounding Revolut’s financial prospects. These developments could potentially impact Revolut’s ability to attract future investments and may undermine its reputation among potential customers and partners. With concerns over its path to profitability and regulatory hurdles, Revolut will need to address these issues to regain investor confidence and make progress towards obtaining a UK banking license.
Molten Ventures’ decision to write down its stake in Revolut by 40% reflects the challenges faced by the fintech company in its pursuit of a UK banking license and overall profitability. The concerns expressed by Molten Ventures and other investors highlight the need for Revolut to address regulatory issues and improve transparency regarding its financial operations. As Revolut strives to overcome these obstacles, its ability to attract investments and navigate the competitive fintech landscape will be critical for its future success.