Revolut’s staff are being offered shares in exchange for lower take-home pay. This comes as the company seeks to tighten its belt in light of the COVID-19 pandemic.
First reported by Financial News, the new scheme offers all staff the option to swap £1 of their salary for every £2 of share options in the company
Both co-founders Nikolay Storonsky and Vladyslav Yatsenko are also forgoing their salaries for a year like fellow challenger bank Monzo’s founder Tom Blomfield. Monzo has also had to furlough hundreds of staff.
Other members of Revolut’s senior team have most likely also taken similar pay cuts.
Co-founder of UK-based fintech Ikigai, Maurizio Kaiser, said following “This could completely wipe out a generation of start-ups, and also wipe out investors who won’t be able to invest in the next set of start-ups”.
“Very early-stage investors have downside protection in the form of Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS), but founders do not.”
“They tend to forego a salary in the early stages and might even have invested their own savings,” says Kaiser.
Revolut announced the closure of a long-awaited $500m fundraising on 25 February. Investors including Technology Crossover Ventures, which led the round, valued the start-up at $5.5bn.
But the digital bank’s revenues have been hit by government-enforced lockdowns and travel bans, according to people close to the bank.
Interchange fees, which are deducted whenever a payment is made using a Revolut card, is another revenue stream that has suffered.
Revolut’s revenues more than quadrupled in the 12 months to 31 December 2018, rising 455% to £58.2m.
However, the start-up saw losses rise to £32.9m in 2018, up 222% on the previous year.