Anne Boden, an iconic Fintech CEO who is the founder of digital bank Starling Bank, revealed that she would be stepping down from the bank last month.
Recently, more information on the exit of Boden has been revealed. Reportedly, Boden decided to step down from her leadership position following a £1 billion decline in the valuation of the Fintech.
“Investor Clash”
According to the FT, the precipitous drop in valuation caused friction with investors. Last February, one large investor, Jupiter, decided to sell its equity stake in the bank, revealing a change in valuation from a previous £2.5 billion to “between £1 billion and £1.5 billion.” The shares held by Jupiter were sold to existing investors. Boden is currently reported to hold a 4.95% stake in the business.
The report states that Starling claims that Boden was not forced out, but the decision was made by her due to an apparent conflict of interest as a shareholder. This and the fact that her decisions were being influenced by her significant shareholding in the company.
Boden will remain on the Board of Directors and thus have a say in the strategy of the digital bank.
While Starling Bank has continued to grow top-line revenue, it has suffered a similar fate of other Fintechs that have seen their valuations slashed – especially by firms needing new capital. Ultimately, it is better to raise money at a discount to a prior valuation than to let the business falter or halt the fuel needed for growth.
While many Fintechs have been hit by the poor economy, the thesis remains the same as all financial services go through an extensive period of digitization as brick-and-mortar operations shut down and digital-only services capture the bulk of all consumer and business transactions. While frothy valuations of the recent past may not return anytime soon, Fintechs will regain their footing once the economy starts to level off.
Additionally, Starling Bank is expected to go public at some point in the future – once the IPO markets see some light at the end of the inflation/recession tunnel.