Nik Storonsky: VCs 'Dangerous,' Revolut's Board Has None
Revolut CEO Nik Storonsky asserts venture capitalists are "dangerous" on boards, revealing his fintech company has removed all VC representation. He urges founders to keep investors purely financial, leading to his creation of QuantumLight, an AI-driven venture firm designed to outcompete traditional VCs.
Revolut CEO Nik Storonsky has strongly advised against venture capitalists holding board seats, labeling their presence "dangerous." The fintech giant, valued at $115 billion, has systematically removed all VCs from its board, urging other founders to follow suit. Storonsky's philosophy: investors often lack the operational experience crucial for guiding companies, likening them to "cheerleaders" attempting to play the match.
Revolut's Boardroom Overhaul
Storonsky detailed his efforts to divest venture capital investors of influence within Revolut's governance. Over consecutive funding rounds, he diluted VC representation on the board, even accepting financial losses. This approach reflects his conviction that a company's board should comprise experienced operators who have built successful businesses.
Storonsky's Critique: VCs as 'Dangerous Cheerleaders'
Storonsky's early experiences with VCs, especially during challenging fundraising in Europe, highlighted their potential for harm. He described many as "not very operational" and "extremely aggressive," demanding tough terms like liquidation preferences and significant voting rights. He contends that when issues arise, non-operational VCs on boards become "cheerleaders" trying to play the game instead of "professional players," leading to "disaster."
He emphasized VCs raise capital from limited partners and "never risk with their own money." Few VCs have built companies, and merely observing boards doesn't equip them to run one. Storonsky's advice: investors should remain purely financial players, devoid of voting rights and decision-making power.
When Investor Advice Misses the Mark
Storonsky shared personal anecdotes illustrating pitfalls of heeding VC advice. He recounted hiring over 50 "experienced executives" at their suggestion during Revolut’s initial five years, only retaining two. He prefers cultivating top 1% talent aged 25-30, arguing the most talented are rarely on the job market. In another instance, an investor pressured him to dismiss a high-performing employee, a request Storonsky firmly rejected.
From Frustration to Innovation: Founding QuantumLight
His aversion to traditional VC influence culminated in QuantumLight, his own venture firm. This initiative sparked from a major clash with a prominent investor who, despite Revolut's $33 billion valuation, sought to block changes to its shareholder agreement. Feeling "extremely pissed off," Storonsky decided to "compete with VCs in their business because they’re so bad."
Launched in 2022 or 2023, QuantumLight uses machine learning models for startup selection, bypassing human judgment. The firm commits identical investments across 30 to 40 companies in Series B rounds over two to three years. Its inaugural $250 million fund generated an impressive 56% internal rate of return, with Storonsky personally contributing 20-25% of the capital.
QuantumLight is deploying a second fund totaling $500 million. Its algorithmic selection factors in signals like the age of the VC partner who backed a startup; partners aged 30-40 indicate better outcomes, while those over 40 serve as a cautionary sign. Storonsky envisions QuantumLight evolving into a BlackRock-like entity for private markets, operating independently from Revolut.
Implications for Startup Governance
Storonsky's bold stance and Revolut's success challenge conventional wisdom regarding investor participation in startup governance. His narrative offers a compelling alternative for founders seeking greater control, suggesting operational expertise, rather than financial backing, should dictate boardroom composition. This shift could inspire reevaluation of the founder-investor dynamic in high-growth tech sectors.
FAQ
Q: Why does Nik Storonsky believe VCs on boards are "dangerous"? A: Storonsky argues that most VCs lack operational experience, don't risk their own money, and their advice can be detrimental. He likens them to "cheerleaders" who interfere rather than professional "players" guiding a company.
Q: What is QuantumLight and why did Storonsky create it? A: QuantumLight is Storonsky's venture firm that uses machine learning to select startups for investment. He created it after a major dispute with a VC investor, aiming to demonstrate a superior, data-driven investment model.
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