July 23, 2021

147: Money Talks #37: Revolut’s Big Raise | Square’s Crossover | Robinhood IPO | Fintech Flywheels

147: Money Talks #37: Revolut’s Big Raise | Square’s Crossover | Robinhood IPO | Fintech Flywheels

Eoin and Pete mine a motherlode of fintech hotspots this week starting with insights into Revolut’s latest $33bn valuation, Square’s quest for crossover between creators, crypto and small businesses, then we dive deep into the upcoming Robinhood IPO and our developing thesis on fintech flywheels.


MoneyNeverSleeps is sponsored by PAT Fintech, the training partner that demystifies fintech and digital finance for financial services professionals.

MAIN STORIES COVERED:

Revolut’s Big Raise

Revolut confirms a fresh $800M in funding at a $33bn valuation to supercharge its financial services superapp (TechCrunch, 15-Jul-21)

Revolut: required study for any student of disruptive innovation (Sifted, 21-Jul-21)

Revolut vs. Nubank: Insight from Rally Cap Venture’s Juan Gabriel (Twitter, 16-Jul-21, thanks Lex Sokolin)

Eoin Fitzgerald on Revolut’s market positioning: “I don’t think Revolut want to be viewed as a bank, because the valuation has to keep growing. Their current valuation is 74x last year's revenue. When you compare it to NatWest, which has a similar number of customers, NatWest is valued at 2.3x revenue.  Revolut needs to stay in the consumer fintech space as opposed to the very different optics of being a bank.”

Pete Townsend on the prospects for Revolut’s sustainable growth: “I think for Revolut to get that flywheel, that self-sustaining flow where revenue growth widens with each revolution of the flywheel, it’s about more than just building out the product base, expand to another country, build out the product a little bit more, expand to another country. I just don't see that being the answer. There's got to be something else there - maybe travel apps, maybe messaging?”

Square’s Crossover

Square to Create New Bitcoin Platform for Financial Services (CoinDesk, 15-Jul-21)

Square to take on incumbents with business banking accounts (Finextra, 21-Jul-21)

Eoin’s take on Square’s strategy: “I think they're making a play on the creator economy.  When we looked at their Tidal deal, it was on the basis that they were giving financial services to creators, artists, singers, musicians, whatever.  Their open developer platform for bitcoin could be an extension of that. It's giving people the full control over their financial life and their financial products, everything they need to have full ownership, and specifically addressing the unbanked as well.”

Pete on the crossover into solving problems in the crypto space: “For those in the creator economy, it can be so goddamned hard to get a bank account. By Square getting into business banking, they can solve that problem for creators.  It’s also really hard for crypto businesses to get bank accounts, and that’s a problem Square can now solve as well.”

Robinhood IPO

Robinhood IPO: Still A Bad Bet for Investors With Alarming Risk (David Trainer, Forbes, 20-Jul-21)

Eoin on the value of online communities: “Robinhood have 32 million subscribers to their daily Robinhood Snacks newsletter and their podcasts had 40 million downloads last year. Their target market is very invested in Robinhood [as a lifestyle], they’re big fans of the business, they get behind everything and they do things in crowds.”

“Like we saw with Walllstreetbets earlier in the year, their community can really move the needle - 17 million monthly users, 32 million subscribers to their daily newsletter. There's a lot of scope to do something really interesting there at volume, as it’s automatic scale.”

Fintech Flywheels

Pete on putting the Disney Flywheel into action in fintech: “We've seen Packy McCormick from Not Boring, he’s up to 60K subscribers on his weekly newsletter, and he now has the Not Boring investment syndicate - you take that audience and you monetize it. There’s Harry Stebbings from the 20-Minute VC podcast, now becoming a venture capitalist.”

“There is this monetization opportunity from audiences, but can you go the reverse way, which is launch your MVP, create a community around that [all of whom might not be users yet] and then monetize that community to do more? Which drives more into your basic product and you develop that product further and grow your community and convert them to users – I think we’re onto a flywheel.”

HONORABLE MENTIONS:

Invest Like the Best with Patrick O’Shaughnessy: David Velez from Nubank (Apple Podcasts)

FTX raises $900mn at $18bn valuation, largest private round in crypto industry’s history (Forbes, 20-Jul-21)

$1 out of every $5 in venture funding went to fintech in Q2 2021 (Morning Brew, 8-Jul-21)

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Pete Townsend

Co-Host

Husband, father, son, brother, founder of Norio Ventures, advisor, non-executive director, podcaster and self-proclaimed rockstar of financial services.

Eoin Fitzgerald

Co-Host

Fintech investor, writer, podcaster, father of 5, wannabe VC, black sheep