53°N interviews Dmitry Ivanov, CEO and co-founder of Wevat
Dmitry, a Physics student from UCL and former Deloitte consultant, meets us on the terrace of Google Campus in Shoreditch for a very on-point discussion on tax refund processes in the UK. He started wevat with 2 ex-colleagues from Deloitte. The company has raised 450k GBP so far and are looking to raise 1m GBP in the next round.
It’s so hard to get your tax back in the UK
When international tourists come to London it is almost certain they are going to shop. With endless opportunities to spend your money, countless tourists must ask for a tax refund form for each single item that they purchase, if they want a refund on their tax. After filling out the form (or not) the tourist waits in a long queue (1.5 hours) at the airport to hand in the tax return forms, after it may take up to 6 months until the refund is granted and deposited. “Cash or Credit?”, the consumer has the choice, Dmitry explains to us, but how simple that question sounds, it makes all the difference. The tax return agency is an FX business, arbitraging the need for other currencies; only if you decide to receive your return in cash (obviously preferred by many, as it means instant pay-out), they can earn money on you with lousy exchange rates. Dmitry tells us: “At the end of your nice holiday in the UK, you are getting ripped off by the the middlemen. Clearly, this is a horrible customer journey, orchestrated in a duopoly by two large players and it has been this way for the past decades”. Something has to change, Dmitry and his two co-founders though and started to explore a digital alternative.
Having plenty of international friends over in London and hearing their complaints, Dmitry is asking himself, why one has to go through such a painful process and also pay a high fee (30%) in order to get the tax back. He sees that every step in the process can be improved and fees can be set much more competitive: a start-up story by the book as it seems, but we quickly figured out that nothing is what you expect it to be.
“It’s a counterintuitive business”
Dmitry has not launched its product yet, but is constantly realising that the nature of his business is changing. But instead of ducking down, he is tackling every new problem with a new solution. “I describe my business as a B2C, which is also what we expected it to be, but in fact we are as much a B2B like the rest of the industry”. One year into the journey Dmitry realizes that this business is not only about building an app and digital transformation but much more about stakeholder management. Their most important stakeholder is the tax authority, an institution for which technology is traditionally harder to embrace. On the other side you have the tourists (the consumers) who appreciate every improvement in the process. For example, Wevat pays the consumer instantly after the tax refund has been approved and waits for the government to pay them back. So, both sides are equally important and must be managed well.
Dmitry told us several times: “This is a counterintuitive company”, and we believe he is right. As an example, when everybody starts freaking out about Brexit, Dmitry is filled with a smile. “Brexit triples the foreign refunds to a multi-billion revenue market in the UK only, driven by European tourist -coming to mainly London- that now can refund VAT as well. We can get a significant share of this market”.
Personal notes and advice
What gets Dmitry excited about his business? He is thrilled that he is changing the industry completely. “This is happening!”, he says, “even though a lot of people do not want to see or believe it”. He really enjoys his journey with all the ups and downs, but he advises us MBA students to do an internship, at least 2 months in a start-up before we jump into becoming an entrepreneur. “The nature of a start-up is different, and you should experience it before”, he says. Also, be mindful that you can handle it mentally and physically, it can be exhausting and there is very little attention to this.
Thank you Dimitry for your valuable and interesting insights and we hope to stay in touch!
And finally our two wacky questions…
… If Wevat was an animal what would it be? “Cat / Lion.” The original name of their company was Vatcat and there was a picture of a cat on his (“in hindsight very ugly”) first investor presentation.
… And if you can hire anyone in the world for Wevat who would it be? ““Someone who is down to earth, nothing is beneath him/her, someone who does whatever is needed to get things done, someone with an intrinsic drive who does things for a meaning…”. Dmitry! We believe you were describing yourself! Kudos!