Revolut has raised $500 million (£387 million) in Series D funding, making it the UK’s most valuable FinTech with a valuation of $5.5 billion (£4.2 billion).

The funding round, led by US fund Technology Crossover Ventures (TCV) - an early backer of Air B n B, Spotify and Netflix - propels the company beyond the valuation of rivals Monzo (£2 billion) and OakNorth (£2.2 billion), the latter of which was previously the highest valued.

The Series D raise, which is one of the largest ever investment rounds raised by a UK or European technology company, takes the total amount raised by the digital challenger bank to $836 million.

Revolut, founded in London in 2015 by Nik Storonsky, a Russian-born banker, as a pre-paid foreign exchange card and app has rapidly expanded into current account, business banking, loans and cryptocurrency products.

Despite having 10 million customer accounts and 23 offices worldwide, the company has yet to turn a profit thought and registered a pre-tax loss of £33 million in 2018 despite a 354 per cent rise in revenues.

In 2019, it increased customer growth by 169 per cent and the number of daily active customers by 380 per cent.

Revolut said it will use the capital to further strengthen product development in its existing markets, further roll-out banking operations in Europe and increase daily engagement from customers.

The company now employs over 2,000 people, and last year made a number of senior appointments across the business in order to scale up its governance operations, including Martin Gilbert, the former co-chief executive of Standard Life Aberdeen, as chairman of the board.

Caroline Britton, a former audit partner at Deloitte, and Bruce Wallace, the former chief operations officer at Silicon Valley Bank, were both appointed as non-executive directors.

Commenting on the funding, Storonsky said: “We’re on a mission to build a global financial platform - a single app where our customers can manage all of their daily finances - and this investment demonstrates investor confidence in our business model.

“Going forward, our focus is on rolling-out banking operations in Europe, increasing the number of people who use Revolut as their daily account, and striving towards profitability,” he continued. “TCV has a long history of backing founders who are changing their industries on a global scale, so we are excited to partner with them as we prepare for the next stage of our journey.”

John Glen, the UK economic secretary and City minister, said: “It is clear that the UK fintech sector continues to thrive, and Revolut's announcement, which comes on the back of record-breaking fintech venture capital investment in 2019, is a clear indicator of our strength as a place for fintech business as we leave the EU.”

However, analysts warned that following the mega-round investors will be expecting to see Revolut turn a profit and make good on its rapid growth thus far.

Aurélie L’Hostis, a senior analyst at Forrester, said: “But we're now entering the reality-check phase for challenger banks – investors will be looking for reassurance that Revolut can achieve sustainable organic growth.

“The US market will be a hard one to crack for Revolut,” she continued, adding: “With that new injection of cash, Revolut is likely to double down on operations in its existing market - improving services for retail and business customers, but also trying to get into lending - the path to becoming a full-fledged bank is likely to be strewn with hurdles though.”

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