A recent incident has raised concerns among UK startups about Starling Bank’s policies.
- Alicia Navarro, founder of Flown, had her company’s account closed by Starling Bank.
- The closure was due to the company’s shareholders being venture capitalists, which breached bank policies.
- This policy could adversely affect numerous VC-backed startups in the UK.
- Such actions hint at potential challenges for small businesses in the UK’s banking ecosystem.
Alicia Navarro, the founder and CEO of Flown, expressed her frustration with Starling Bank after her company’s account was unexpectedly closed. She revealed that the bank’s reasoning was linked to her startup having corporate shareholders, specifically venture capital investors. According to Navarro, this is in violation of Starling’s terms, which require all persons with significant control of a business to be UK residents and natural persons.
Navarro’s company had been a client of Starling Bank for four years, during which they consistently had venture capital investors. She was surprised by the bank’s decision, noting that it was their recent growth that brought them under scrutiny. “I’m astounded,” Navarro shared on LinkedIn. She advised other startup founders banking with Starling to consider alternative banking options to avoid a similar situation.
Navarro criticized the bank’s policy, arguing it could impact virtually every venture capital-backed startup in the UK. Despite questioning the policy, she was reportedly told that the bank could not make exceptions. This stance poses a significant challenge to startups that rely heavily on venture capital funding, potentially leading them to seek banking services elsewhere.
The debate highlights the broader issue of UK banking requirements, which dictate that companies must disclose their ultimate beneficial owners. There has been increased scrutiny on this front, with high-profile cases such as the fast fashion group Shein facing backlash for non-compliance.
Starling Bank, known for high customer satisfaction ratings, has recently faced criticism for its financial crime prevention systems, resulting in a hefty fine. The bank’s recent actions raise questions about its commitment to supporting the UK startup ecosystem.
The decision by Starling Bank to enforce stringent policies on VC-backed startups may compel these businesses to look for more startup-friendly banking solutions.
