A UK challenger bank backed by Qatar and the founder of eBay is rapidly growing its headcount and talking to investors about fundraising after a year of “meteoric growth.”
Tandem Bank said on Tuesday it had moved into a new 16,000 square foot office in London as part of plans to double headcount this year to 230 and grow to 300 people by the end of 2020.
It comes after what CEO and founder Ricky Knox said was a year of “meteoric” growth. Tandem, which offers credit cards and savings tools, began 2018 with “no revenue, and basically no customers” and ended with around half a million customers.
“Last year we hit 500,000 customers when we had an expectation for 150,000,” Knox told Yahoo Finance UK. “We’ve just done an aggressive push on expanding customer service, right the way across operations actually. But we need more people.”
‘We’re speeding up’
Tandem was founded 2015 and was one of a wave of app-only “neobanks” founded in the UK at the time. Others included Monzo, Starling, Atom, and Revolut.
Due to funding set-backs, Tandem’s first year of full operations was 2018. Knox contrasted Tandem with Monzo, which attracted 150,00 customers in its first year, and Revolut, which signed up 300,000 in its first year.
“It’s certainly the fastest I’ve ever grown a business,” Knox, a serial entrepreneur, told Yahoo Finance UK.
“We’re not slowing down the rate at which we’re growing, we’re speeding it up if anything, and we’re looking at adding Europe as well within the course of the year. That’s a lot of extra work to take on so we need the team that’s commensurate with that.”
Knox declined to say where in Europe Tandem was targeting but said the company was in discussions with a number of regulators.
‘Being a UK-only business is just a bad strategy’
Tandem planned to go pan-European from its founding but Knox said Brexit was a factor in the timing.
“In a Brexit world, being a UK-only business is just a bad strategy,” he said.
Tandem is currently trying to raise money from investors and Knox said Brexit often comes up in discussions.
“Try talking to a US investor, or in fact any investor, about a UK-only business and the B-word is their main risk factor or reason not to do a deal,” he said.
Knox said Brexit was also causing a “squeeze on talent, particularly on the technology side.”
“Historically, we saw people just going home, going sod this I don’t want to make my career in the UK if it doesn’t like people like me,” he said. “Often that was as much as an emotional thing as much as it was a factual thing.
“Now you definitely see that in talent, particularly in certain areas. Areas like for example cloud engineers who have experience with AWS [Amazon Web Services].”
‘There’s a lot of excitement’
Knox declined to say how much Tandem is looking to raise or how much it might be valued at in the funding round. He said talks were going “super, super well.”
“I’ve grown a business from zero to £25m in one year,” Knox said. “That just doesn’t happen. That’s unbelievable growth in one year. So there’s a lot of excitement. And a lot of excitement in the sector.”
European app-only challenger banks have raised millions of dollars in recent years and Monzo, Revolut, and Germany’s N26 have all become so-called “unicorns” — private tech businesses worth over $1bn.
Any new investors in Tandem will sit on the share register alongside eBay cofounder Pierre Omidyar, who invested in Tandem in 2016.
While rivals Monzo, Revolut, and Starling have focused on current accounts, Tandem has focused on credit cards.
“Credit card is a primary spend card for a large segment of the population,” Knox said. “If you want to try a digital bank and a credit card is your front of wallet card, Tandem’s the only choice in the market right now.”
Tandem’s development was initially held back by the collapse of a funding deal with House of Fraser in 2017, which resulted in the loss of Tandem’s banking license. However, Tandem regained its license through the acquisition of Harrods Bank later that year.
As part of that deal, Harrods-owners Qatar Holdings invested £81m into Tandem. Tandem’s new funding round is understood to be either equivalent or larger than this cash injection.
Filings show that the Qatari investment vehicle owns over 50% of the business.