Even with a $4B fortune, there's room for a side hustle

Nik Storonsky spent the past decade shaking up banking with his financial services firm Revolut. Now the billionaire former Lehman Brothers trader is looking to pull off a similar feat in venture capital.

Storonsky has built a quantitative investment firm for early-stage companies that relies on algorithms and artificial intelligence over human input to source deals. Founded in 2022, QuantumLight has invested in almost a dozen startups in the past year after raising about $200 million for a debut fund that Storonsky anchored. 

In recent weeks, the London-based firm took a stake in health care-focused startup Rad AI, the fund’s fourth allocation this year despite a downturn in the venture sector. QuantumLight is currently finalizing another deal, according to a person familiar with the matter.

While many startup investors boast about their savvy use of data, QuantumLight positions itself as an outlier. 

“We look quite different compared to a traditional venture firm,” Chief Executive Officer Ilya Kondrashov, 38, said in an interview at the London offices of Revolut. “It’s pretty logical that something like what we are doing will exist.”

Storonsky, 39, joins a growing number of European tech billionaires building venture investments as they expand their wealth outside their primary assets. 

Checkout.com founder Guillaume Pousaz’s family office, Zinal Growth, has invested in at least two dozen startups since 2021, while an investment firm for Spotify Technology SA’s Daniel Ek put €10 million ($10.7 million) last year into a Swiss startup that works on slowing aging.

Pousaz and Ek have a combined fortune of about $10.4 billion, while Storonsky, Revolut’s co-founder and CEO, is worth roughly $4 billion, according to the Bloomberg Billionaires Index.

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Revolut disclosed its 2023 results this week, showing that revenue almost doubled to $2.2 billion. A timely release of its audited financial results could help the company win approval of a UK banking license, which has been long delayed, partly over Revolut’s accounting problems.

Storonsky, who founded Revolut in 2015, allocated about $60 million to QuantumLight’s fund. In an emailed statement, he said his venture firm’s strategy allows it to make more precise decisions at a quicker pace than humans, and he expects those methods to play a greater role in the market for startup deals.

“These systematic strategies will command a meaningful share,” he said. “Like Revolut is challenging the traditional banks, QuantumLight has ambitions to take on giants.”

Quant investing has been a powerful force in public markets for decades, but systematic players typically haven’t touched private assets because a lack of publicly available data hindered analysts’ hunt for profitable patterns and dislocations. That’s rapidly changing as Wall Street firms seek to gain an edge amid a recent boom in private equity and credit, with firms such as Ares Management Corp. and BlackRock Inc. hiring quantitative analysts more usually found in data-heavy parts of finance.

QuantumLight has similarly hired several data engineers among its roughly two dozen employees, though the firm remains a relatively small player for venture capital.

While several venture funds have used AI models to sift through potential deals, those tools aren’t as critical as an investor network, said Claudia Zeisberger, a senior affiliate professor for entrepreneurship at business school Insead. 

“Ultimately, in VC, money is not a differentiator,” she said. “It’s the soft stuff, the door-opening and so on.”

QuantumLight bills itself as the “first truly systematic” venture firm and raised money from other tech founders and family offices for its debut fund.

Kondrashov said his portfolio company executives get access to a “playbook” that draws on Storonsky’s experience of turning Revolut from a modest business focused on pre-paid debit cards into one of Europe’s most valuable startups, providing bank accounts, money transfers and stock trading.

Kondrashov, a Cambridge University graduate and former Goldman Sachs Group Inc. analyst, previously started his own UK fintech called Kriya. He said Storonsky remains the main figure behind QuantumLight.

“He’s part of all the major decisions,” Kondrashov said.

The two first met before the pandemic at a dinner for entrepreneurs in central London and later reconnected as Storonsky was starting to build up QuantumLight in 2022. The fund, which made its first deal in July 2023, allocates about $5 million per investment. 

Kondrashov said he expects to continue making investments at a consistent pace for the next three years or so with no immediate plans to raise another fund.

“We are probably going to be adding roughly a deal a month,” he said. “We raised all the capital that we need.”