Molten Ventures reduces Revolut valuation by 40%

Molten Ventures reduces Revolut valuation by 40%

Molten Ventures, a prominent venture capital firm, has marked down the value of its stake in the FinTech enterprise Revolut by 40%, according to a report from Finextra.

This unsettling news adds to Revolut’s predicaments as it finds it difficult to secure a UK banking licence.

The investment firm has notably trimmed the worth of its £7m stake in Revolut, from an earlier valuation of £91.3m in March last year, to a much lower £54.5m at the close of March this year. The revised valuation comes against the backdrop of a tough year for Molten Ventures, marked by a sell-off in tech stocks. The company recorded a loss of £243m, as reported in a trading update on Wednesday, compared to a profit of £301m in 2022.

Revolut, widely regarded as a global FinTech powerhouse, offers a wide array of services ranging from digital banking and trading to insurance and business accounts. However, the company has found it challenging to secure a banking licence in the UK, which is fundamental to its growth strategy in the country.

The funding from Molten Ventures was intended to bolster Revolut’s ambitious growth plans. However, the recent devaluation, coupled with the difficulties in gaining the UK banking licence, presents significant challenges for the company.

Molten Ventures’ CEO Martin Davis said, “The past year has delivered a significant shift in the investment environment, particularly in the high-growth technology markets, as interest rates were increased to combat global inflationary pressures. This challenging market backdrop has led to a reduction in the value of our portfolio, and our focus for this year has been centred on the active management of our investments while adapting our business to respond positively in the face of market pressures.”

Davis has attributed the write-down of Revolut’s value to market apprehensions about the company’s ability to secure the banking licence and the potential profitability of the company.

The auditor, BDO, flagged concerns about Revolut’s accounts, unable to verify £477m of revenue, due to issues with the configuration of the company’s internal IT systems.

This valuation write-down of Revolut’s stake by Molten Ventures follows a similar path taken by Schroders, another investing firm, which lowered its investment valuation in Revolut by roughly 46% in April.

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