London VC’s bet on Revolut pays off

0:02Good morning from the Financial Times. Today is Wednesday, January 14th. And this is your FT News Briefing. Tree Calor senior executives appeared in court yesterday. And can companies build data centers without passing on the cost to consumers? Plus, a venture capital company that hit the jackpot with Revolut proves sometimes small ball is the key to big wins. If you can own a meaningful percentage of a rocket ship, then it's going to work out pretty well for you. I'm Mark Filippino, and here's the news you need to start your day.

0:43The former CEO and the former chief operating officer of Tree Calor Holdings pleaded not guilty in a New York court yesterday. Federal prosecutors are accusing Daniel Chu and David Goodgame of fraud and financial crimes. Tree Calor specialized in selling used cars and providing subprime financing to lower income customers, and it suddenly collapsed last year. The indictment said Tree Calor borrowed more than a billion dollars from lenders, including J.P. Morgan and Barclays, based on fabricated data and false statements. The company's unraveling got people worried about lending standards and possible cracks in the debt market.

1:20Chu and Good Game did not speak in court yesterday. They declined to comment to the Financial Times.

1:31The Trump administration has pushed artificial intelligence as a priority. But the data centers that are crucial for AI use a lot of electricity and make electricity cost a lot more for everyone around them. Companies are thinking about these costs. And yesterday, Microsoft pledged to, quote, pay its way for these data centers so others don't get hit. Here to talk about this is the FT's energy reporter, Martha Muir. Hi, Martha. Hi. So what exactly did Microsoft say yesterday? So it came out with a package of five pledges. one of which says that they are going to pay higher rates for the electricity they use.

2:11And this should help to pay not only for the electricity that they pull from the grid, but also for the infrastructure upgrades like new power generation assets and the wires and poles that connect them to the grid. Now, I got into it a little bit earlier, but why is paying its way such a big deal for these AI data centers? So at the moment, as you mentioned, And quote unquote, winning the AI race is a huge strategic priority for the Trump administration. But recently, we've started to see local opposition and backlash kind of put a spanner in the works. So Microsoft themselves had to cancel a data center in Wisconsin in 2025 after locals organized against it.

2:53And the Trump administration is in danger of electricity prices getting too high. And Republicans have already lost elections due to this issue. So it's kind of in their interest to stop bills from going too high, but then at the same time, they also have to figure out how to get these data centers built. Do you think that other companies that rely on these data centers for their AI ambitions will follow suit? Yeah, so companies like Amazon have made pledges to invest in infrastructure where they're building data centers. And then utilities like Georgia Power have kind of gone on the offensive trying to justify infrastructure building by saying that it won't be passed on to rate payers.

3:38At the moment, it seems like companies of all stripes, be they data centers, utilities, are coming to kind of go on the offensive to say, actually, no, this won't have an impact on your bills. And it might even be beneficial by sharing the cost of infrastructure amongst more rate payers. Well, this was actually my next question. Do you think that this will have any impact on the cost of energy? A lot of agreements struck between data centers and utilities are a bit opaque. And there are a lot of accusations and data suggest that when designed poorly, these rates can drive up electricity costs.

4:16In a lot of cases, it's too early to say just because these data centers are still being built. And oftentimes the effect in consumer utility bills doesn't show up straight away. One of the problems, though, is that it's not always straightforward who should be paying for infrastructure and where exactly those costs fall. So it's possible for data centers to make deals with utilities, but then ratepayers and another utilities end up landed with the cost because the transmission line or generation is also in that area. What are the odds that Microsoft actually follows through on this promise? It's kind of hard to speculate because, you know, I can't look inside Microsoft's heart.

4:59I think the problem that skeptics would bring up is that oftentimes there just isn't a lot of transparency into the agreements being struck between utilities and hyperscalers. And so it's hard to say what the odds are, but there isn't that much recourse to figure out what these agreements actually entail and how fair they might be. That's the FT's energy reporter, Martha Muir. Thanks, Martha. Thanks.

5:29U.S. inflation did a whole lot of nothing in December. Yesterday's Consumer Price Index report showed that annual inflation didn't budge from November. It stayed at 2.7%. Now, that CPI figure is still higher than the Federal Reserve's 2 % target, but the fact that it didn't change month to month shows that inflation is staying contained. It's worth mentioning that core inflation, which includes volatile stuff like food and energy prices, didn't rise quite as much as economists expected, the report did show that housing-related prices are still a concern. Another worry is the impact of last year's government shutdown.

6:07The criticism was that data had been distorted due to collection difficulties during the closure, and so economists are worried about December CPI figures.

6:22A London-based venture capital firm hit the jackpot when it invested in the UK fintech revolute. It turned out to be one of the most lucrative bets in European venture history, and it capped an exceptional year for Balderton Capital. Here to tell us more is Ivan Levingston, who's been talking to the firm about this. Hi, Ivan. Hey, how's it going? Doing well. So tell us a little bit about Balderton Capital. Balderton Capital is one of the most longstanding European venture capital investors. Americans might be more familiar with them based on their origins as the European arm of the storied Silicon Valley investment group benchmark.

7:02Balderton split from benchmark in the 2000s and named themselves in a moment of urgency after the street that they were located on in London. They've been operating in Europe for about 25 years. They've raised more than$5 billion to invest, and they focused all along on being a small partnership and making early-stage investments in European startups. And one of the early-stage investments is this investment in Revolut that I was talking about earlier. How much did they invest, and what is it worth now? The initial investment in Revolut, which must be, if not the, then certainly one of the best-ever European VC deals, was a£1 million check into Revolut.

7:48Today, Revolut is worth$75 billion. And that initial one million pound check is itself worth billions. And the firm invested a bit more in future deals. But that initial one million check is the cornerstone of this massive win today. Tell me what Balderton told you about why it decided to make this big bet on Revolut in the first place. When Balderton first invested in Revolut about 10 years ago, there were two primary things that jumped out to us when they were explaining the deal. The first was thematically. Bollerton looked at the landscape and saw that Revolut was pitching this vision of digital financial services, digital banking.

8:34And Bollerton saw that Europe has a strength historically in financial services, and it really could be a leader in the next generation of financial technology and could be competitive with the U.S. The other thing was just the founder and chief executive of Revolut, Nick Staronsky, is quite a compelling, decisive leader. And they had a lot of conviction in his ability to be a great leader. So, Ivan, what is the big lesson that we should take away from Baldurton's investment in Revolut? Baldurton stands out for retaining this small partnership culture. It only has six investing partners, and it really is focused on early-stage European deals.

9:21But the company has generally stuck to its focus while all around in the VC market, firms are now raising bigger and bigger funds to invest in more mature, massive companies. Bollerton is maintaining this more focused local approach. Ultimately, the lesson of Ballerton's Revolut deal is the lesson of a broader venture capital, which is that the big home runs make up for all the misses. If you can own a meaningful percentage of a rocket ship, then it's going to work out pretty well for you. Ivan Livingston is the FT's European Deals Reporter. Thanks so much, Ivan. Thank you. Who doesn't love a good discount?

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10:41Thank you.