Revolut chief executive Nik Storonsky has pushed venture capital investors off his company’s board, one funding round at a time. He wants other founders to keep VCs out of the boardroom too, he told David Senra in a podcast interview.

Storonsky compared VCs on boards to football cheerleaders who try to play the match. The interview is on YouTube, with a full transcript on Senra’s site. Revolut, valued at $115bn, operates in 38 countries.

“Pretty early on I realised that quite a few VCs are not very operational, and they can be actually dangerous for the company if they have enough power,” Storonsky said.

So in every investment round, he removed VCs, and he took losses to do it, he said. Revolut now has no VCs on its board. Boards should be made up of operators who have built businesses, he said.

Cheerleaders on the pitch When Storonsky started Revolut 12 to 13 years ago, raising money in Europe was hard, he said. There were few VCs, and many investors acted like private equity firms, “extremely aggressive, extremely legalistic”.

To raise, founders signed tough terms: liquidation preferences, which pay investors back first, board seats, and fewer voting rights for founders. Some early Revolut investors thought they deserved a large part of its success, he said.

“If something goes wrong, you effectively have cheerleaders who look at the match and then they try to play this match instead of professional players. And that’s always disaster,” Storonsky said.

He said a VC’s job is “so much easier” than running a company. VCs raise money from limited partners, the backers of their funds, and “never risk with their own money”, he said. Almost none of them have built a company, and sitting on boards does not teach anyone how to run one.

His advice to founders is to read the shareholder agreement closely. Investors should be purely financial players, with no voting rights and no seat at the table where decisions are made, he said.

The advice he ignored Some of the advice he got from VCs was wrong for the company, Storonsky said. VCs told him to hire experienced executives.

In Revolut’s first five years, he hired more than 50 of them and kept two, he said. The best people, he argued, have already “made it” and are not on the job market. He prefers to hire people aged 25 to 30 who are in the top 1% of their peers.

Another investor, whom he called “quite a good investor”, pushed him to fire his best person for being “too hardcore”, Storonsky said. He refused. “Of course I didn’t fire him. I said no,” he said.

The investors who had backed the request stepped back after he fought them, he said. He did not name them.

A VC fund of his own In 2022 or 2023, Storonsky clashed with a big-name investor that had come in at a $33bn valuation, he said. It had the legal right to block changes to Revolut’s shareholder agreement.

“I was extremely pissed off and I thought, you know what, I also need to compete with VCs in their business because they’re so bad,” he said.

The result was QuantumLight, a venture firm that picks startups with machine learning models rather than human judgement. The models select 30 to 40 companies over two to three years and put the same amount into each, he said.

The first fund, $250m for Series B rounds, has returned a 56% internal rate of return, Storonsky said. He put in about 20% to 25% of it himself. QuantumLight is now investing a $500m second fund.

One signal the models use is the age of the VC partner who backed a startup. Companies backed by partners aged 30 to 40 do best, and partners over 40 are a warning sign, he said.

QuantumLight is separate from Revolut, which Storonsky wants to turn into a global tech company. He said the goal for the fund is something like BlackRock, but in private markets.