Nutmeg chief executive Neil Alexander

Credit: Nutmeg

The boss of investment app Nutmeg looks startled for a second when he’s told that fast-growing challenger banks are plotting ways to steal his customers.

“I didn’t know they wanted to destroy us… and I’m not sure they can at the moment,” he says with a playful smile over video call.

Neil Alexander is the investment management app’s third chief executive in its 10 years of existence.

And he has good reason to be confident about the company’s future. During Britain’s lockdowns, Nutmeg managed £3bn of assets for 130,000 customers, allowing them to enter their own risk tolerance for investments. The former accountant, who speaks at a rapid pace from a standing desk at home, is now considering a float in London within the next two years.

“You’d like to think Nutmeg, being born and grown up in the UK, London would be the place to list it,” says the 51-year-old. But he warns it isn’t a done deal. Deliveroo’s disastrous float in the capital last month, which wiped £2bn from its valuation, left investors reeling. Nutmeg may yet follow the well-trodden path of UK tech companies and list in the US in order to scale up.

Changes to London’s listing rules to allow dual class share structures could sway him, he says: “The recommendations made by Lord Hill, and separately by Ron Kalifa, would help to make London more attractive for listings, and indeed tech and fintech listings.”

Founded in January 2011, Nutmeg was an early financial technology success as it tried to convert the masses into using wealth management, handing their savings over to Nutmeg. In 2019, it was worth $317m (£228m), with its valuation likely significantly higher after lockdown.

CV | Nutmeg CEO Neil Alexander

Challenger banks have privately boasted about their ability to leapfrog Nutmeg by handing customers their own investment tools inside their bank account apps. But Alexander has bigger plans. He wants to take on the likes of Robinhood, the stock trading app that helped take GameStop shares to dizzying heights amid a campaign by retail investors to cause hedge funds large losses. GameStop shares rose from about $20 to $480 in just two weeks, before collapsing.

“When we view [what happened with GameStop], we’ve got our head in our hands, really,” Alexander says. “I imagine a few people made money and a lot of people lost money.”

“Our mantra remains the same, that it’s best to have a diversified portfolio,” he says.

Nutmeg’s vision of stock trading seems like it would help ease investors into stock picking without the high risks experienced by new, younger traders using apps like Robinhood during the GameStop rush earlier this year.

If Nutmeg can hold people’s hands while helping them pick an investment strategy, perhaps the same approach could work for buying shares too.

Alexander, ever the accountant, is keen to talk through Nutmeg’s financial position. The business is on the brink of reaching break-even after reducing its losses by 30pc in 2020, he says, and has enough in the bank to begin generating profits.

“We’ve got enough money to get through to profitability, definitely. I’ve done the spreadsheet myself,” he says with a smile. “We’ve crossed the 10-year horizon which is a big milestone for a business. Luckily I didn’t have to do the first six or seven.”

Alexander has an unorthodox background for a tech chief executive. A keen sailor as a child in Cardiff, he gained a degree in naval architecture from Southampton university.

“I went through a prospectus and there was a photograph of a boat. I went ‘Yeah, that’s what I want to do,’” he recalls. “I thought I was going to draw boats and do a bit of sailing but it turned out it was engineering so it was really intense maths.”

After university he entered the world of accountancy, leaving his passion for sailing behind. “I’ve still got my windsurfing board but it’s in the rafters of the garage now.”

He may have swapped a life at sea for spreadsheets and boardroom meetings, but he still has a daredevil spirit. And after a decade of offering managed investments to customers, he doesn’t see Nutmeg as a start-up any longer.

“I think ‘start-up’ is stretching it a little bit. That’s like me saying I’m still 40,” he says from his home in Herts, where he lives with his wife and two sons.

“Nutmeg has got some amazing backers and the longer term backers are VCs. All these people, eventually at some point they would like to realise some value, and how do you do that? It’s either through a trade sale or it is through an IPO,” he says. The business has been approached by one foreign special purpose acquisition company, he says, but cautions that’s not a route the company is pursuing.

He says he “often” meets with larger companies that could go on to buy Nutmeg. “Unsurprisingly we do have lots of conversations but in terms of serious intent, nothing at the moment.”

“If we get approached, we have a responsibility to examine those approaches,” he says. “We don’t have a for sale board outside.”

If he gets his way, Nutmeg will remain an early British financial tech success story that has paved the way for subsequent challenger banks.

A London float would crystallise this, helping Nutmeg become the leading wealth management service rather than just one part of another banking app. “Hopefully you’ll be with Nutmeg for decades, not three months or three years,” he says proudly.