One of the early-stage backers of Spotify, Airbnb and Netflix is in talks to invest hundreds of millions of dollars in Revolut, the British-based digital payments and banking group.
Sky News has learnt that Technology Crossover Ventures, or TCV, is proposing to commit a substantial proportion of a $500m (£385m) equity-raising being assembled by Revolut.
The company, which is also seeking to raise $1bn of new debt, wants to secure the new funding at a valuation of between $7bn (£5.4bn) and $8bn (£6.2bn), according to insiders.
If it manages to do so, it would make Revolut Europe’s most valuable fintech business.
Sources said this weekend that the talks were ongoing and may not result in a formal agreement being reached by TCV and Revolut.
TCV, which raised a $3bn (£2.3bn) fund at the beginning of the year to back fast-growing tech companies.
It boasts one of the most formidable investment records of any Silicon Valley institution, having backed start-ups including Expedia, Facebook, LinkedIn and Peloton – the last of which is among the latest crop of US tech unicorns to go public.
In the UK, TCV’s portfolio includes World Remit, the money transfer platform.
The firm says it has invested a total of more than $10bn (£7.7bn) in tech companies around the world.
TCV is not the only venture investor to be in talks with Revolut, with a number of other funds also understood to have given term-sheets to the UK-based company.
Its funding round is expected to be concluded during the first quarter of 2020.
Sky News revealed in October that Revolut has hired the investment bank JP Morgan to orchestrate both elements of the fundraising.
If successfully completed, it would catapult the business into the rarefied ranks of technology companies which have secured individual funding rounds in excess of $1bn (£770m).
Revolut, which is led by founder and chief executive Nik Storonsky and was set up just five years ago, now has 9m customers.
It recently appointed the City veteran Martin Gilbert as its chairman from the start of next year.
Michael Sherwood, former boss of Goldman Sachs in Europe and one of the City’s most prominent bank executives, is also being lined up as a non-executive director, although Revolut has yet to formally confirm his appointment.
The fundraising plan comes within months of Revolut unveiling a global deal with Visa, the payments giant, that will take the company into 24 new countries.
Under their new partnership, Mr Storonsky’s company will issue Visa-branded cards in markets including Canada, Japan, Singapore and the US.
Revolut has also struck a significant deal with Mastercard.
Insiders said that Revolut was seeking to raise its new loan on the basis that it would convert into shares in the event that the company received a US banking licence.
If it secures the full $1.5bn from investors, it would take the total raised by the fintech group during its five-year existence to almost $2bn – a huge sum for a British-based technology company.
Revolut is also shaking up its executive ranks, hiring a senior executive at Metro Bank as its new finance chief.
The management overhaul comes as Revolut has been forced to respond to stiff challenges to its reputation, including alleged links to the Kremlin – which it strenuously denies.
It has faced searching questions about the quality of its compliance functions, after becoming mired in a row about claims made in a newspaper article that it had “switched off” an automated system designed to prevent its money transfer system being used to violate international sanctions.
Revolut insisted that the new system was simply being tested alongside existing controls.
It operates in 32 countries, with the Visa partnership taking the total to 55.
Revolut says it is opening 12,000 accounts every day – equating to four million each year – and has received financial backing from some of the biggest names in the venture capital industry, including Balderton Capital, DST Global and Index Ventures.
The move to target more than £1bn in new equity and debt comes amid a race by banking start-ups to raise capital for expansion and regulatory purposes.
Monzo, which is chaired by the former Northern Rock chief Gary Hoffman, recently announced a £113m fundraising which valued it at more than £2bn.
Zopa, another digital player, has just closed a £140m capital-raise but at a big discount to its previous valuation.
Earlier this year, Mr Storonsky told Financial News that he would like Revolut to be worth between $20bn (£15.8bn) and $40bn (£31.6bn) before it contemplates a stock market listing, which is likely to be some years away.
Despite its multibillion pound valuation, Revolut continues to be lossmaking, although that hardly makes it an anomaly among prominent technology companies.
Investors have begun to demonstrate greater scepticism about tech firms’ pathway to profit, with WeWork’s parent recently forced to abandon its New York flotation amid financing and governance concerns.
In results published earlier during the autumn, Revolut said it had made a pre-tax loss of £33m in 2018, compared with £15m the previous year.
However, revenues grew more than fourfold from £13m to £58m, with the company saying it was on course to triple revenues again this year.
The Bank of England’s Prudential Regulation Authority recently challenged faster-growing firms under its auspices to adopt more rigorous stress-testing and evidence of greater challenge by board members.
Revolut and TCV declined to comment.