A London-based tech founder expressed dissatisfaction with Starling Bank after her company’s account was closed.
- The account was shut down due to a policy concerning company shareholders, which the founder found troubling.
- This situation highlights concerns about the suitability of Starling Bank for startup businesses.
- The founder highlighted that the bank’s policy may affect many UK startups with venture capital investors.
- The founder urged startups to reconsider their banking choice with Starling Bank.
A tech founder from London has openly criticised Starling Bank for what she perceives as a decision unfriendly to startups. Alicia Navarro, CEO of Flown, reported that her company’s account was closed due to a policy she described as concerning. The policy in question involves restrictions on company shareholders, which Navarro found particularly alarming given the typical composition of venture capital-backed startups.
Navarro detailed the incident in a LinkedIn post, expressing her astonishment at the bank’s decision. She stated that despite her company having operated with venture capital investors for years, Starling Bank informed her that this now made the account in violation of their terms. Starling cited the presence of company shareholders as the reason for the account’s closure.
Under current policies, Starling Bank requires all persons of significant control within limited companies and LLPs to be UK residents and natural persons, which excludes corporate shareholders. Navarro argued that this policy could potentially impact all venture capital-backed startups in the UK. Despite having been a customer for four years with such shareholders, the bank took this action, leaving Navarro to advise other startups to reconsider their banking arrangements.
The founder remarked that this development sends a worrying signal to small businesses aiming to establish themselves in the UK. It reiterates a broader issue where UK banking requirements demand the declaration of ultimate human beneficial owners. This mirrors similar controversies, such as the case involving fashion group Shein, which faced scrutiny for ownership disclosures less than a year ago.
Alicia Navarro’s company, Flown, which aims to innovate how we work virtually, faced uncertainty due to this policy change. Having raised a £2.5m seed investment in 2022, Flown represents a growing number of startups that might be affected by such banking policies. This situation calls into focus the balance between regulatory requirements and the flexibility needed to support business innovation.
This account closure by Starling Bank raises critical questions about the bank’s policies and their implications for startup operations in the UK.