Cleo Secures Unicorn Status as Founder Critiques UK Regulations

Entrepreneur Barney Hussey-Yeo has transformed his startup, Cleo, into a unicorn with a valuation exceeding $1 billion. Just nine years ago, he made the pivotal decision to leave his PhD studies behind, encouraged by Matt Clifford, who urged him to embrace the risks of entrepreneurship. Cleo has now achieved significant growth, reporting over £100 million in revenue last year, reflecting an impressive annual increase of 106 percent.

Cleo is a fintech company that leverages artificial intelligence to assist young people with personal finance queries through its financial assistant. Hussey-Yeo describes the rapid evolution of his career as “wild,” but expresses no regrets about his decision to pivot from academia to entrepreneurship. He notes, “In that five-year period, I’d have been earning £30,000 a year, working part-time, doing the PhD… Cleo became worth half a billion and was meaningfully liquid.”

As Cleo prepares for a return to the UK market, Hussey-Yeo has voiced concerns about London’s capital markets, particularly following a recent meeting with an investment banker. He stated that Wall Street “mocks” the City of London, highlighting a perceived lack of competitiveness.

Challenges in the UK Regulatory Environment

Hussey-Yeo attributes part of Cleo’s earlier exit from the UK market to regulatory hurdles. He explains, “Regulation was one of the major reasons that I left the UK and made the US the dominant market.” Despite plans to re-enter the UK later this year, he remains cautious. “It is risky to be in the UK,” he adds, underscoring the challenges posed by the current regulatory landscape.

The UK’s Chancellor, Rachel Reeves, recently criticized the regulatory environment, describing it as a “boot on the neck of businesses.” She has called for reforms to encourage firms to remain in the UK for listings. While Hussey-Yeo acknowledges Reeves’ efforts, he insists there needs to be a broader discussion about the government’s risk appetite. He notes, “When you talk to the regulators, they hear the message from Reeves but want to discuss what the government’s risk tolerance actually is.”

Hussey-Yeo believes that regulators find themselves in a difficult position, balancing pressure from Reeves with a lack of clarity on acceptable risk levels. He argues that this conversation is essential for enabling a more conducive environment for innovation and investment.

Future Plans and Market Outlook

While he is cautious about re-entering the UK market, Hussey-Yeo is looking to secure additional funding for Cleo in the near term. He mentioned plans for a Series D funding round in January 2025, which is expected to further enhance Cleo’s valuation. “It just got easier and easier for us along the way,” he states, pointing to improved engagement with customers and advancements in technology that have enhanced the product offering.

Despite the remarkable growth of Cleo, Hussey-Yeo cautions that significant reforms are necessary for the UK market to attract new listings. “You would need some really fundamental reforms to get people to list here,” he asserts. He believes that while these changes are achievable, there are numerous obstacles to address.

One of the radical suggestions he proposes includes a merger between the London Stock Exchange and a major US index. He argues that collaboration between trusted nations could facilitate smoother operations for companies working across international jurisdictions. “The UK is only ever going to have finite capital. It’s the sixth biggest economy in the world, but it’s finite,” he explains.

Hussey-Yeo contends that the UK has become increasingly risk-averse, resulting in a trend where startups are developed only to exit to more favorable environments, particularly in the US. He cites the recent move of Wise, which transferred its primary listing to the US, as a “natural” progression for companies seeking better opportunities.

As Cleo continues to evolve, Hussey-Yeo remains committed to addressing the challenges faced by the fintech sector in the UK. With an optimistic eye on the future, he is determined to navigate the complexities of the market to ensure Cleo’s ongoing success.