Brexit referendum "significantly impacted management's ability to raise funding when planned";

Fintech startup lost £20.4 million as it spent heavily developing technology;

The recent takeover of loss-making Harrods Bank brings £80 million funding, securing future, CEO says.

LONDON — Startup bank Tandem says last year's Brexit vote made it "significantly" harder to raise money.

Last June's vote to leave the European Union "significantly impacted management's ability to raise funding when planned," Tandem says in its 2016 accounts, which were filed with Companies House this week.

Founded in 2015 by serial tech entrepreneur Ricky Knox and Capital One cofounder Matt Cooper, Tandem is trying to build an app-only bank pitched at millennials. The company has yet to launch to the public and has spent two years developing its technology.

Tandem raised £28.2 million in equity funding last year, including £1 million through crowdfunding, and £1.2 million in subordinated debt, accounts show.

However, extensive investment in tech and product development pushed it to a £20.4 million loss last year, up from a £6.4 million loss in 2015. Tandem had no income in 2016 and was left with £7.3 million of cash in the bank at the end.

Tandem thought it had secured £35 million in December last year in a deal with House of Fraser that would have funded the launch of its app-only bank account. But that deal fell through in March after the app-only bank had received just £6 million.

The funding setback led Tandem to lose its banking licence and forced it to delay and scale back launch plans, lay off staff, and seek additional funding. As Business Insider previously reported, the startup raised £3.6 million in April selling shares at a discount.

'No further money is needed for the time being'

Tandem's future appears have been secured by a share-for-share takeover of the loss-making Harrods Bank, announced in August. Tandem received a £10 million cash injection from "existing and new investors" as part of the deal and will get a further £70 million once the deal is approved by regulators.

However, auditors PwC place an "emphasis of matter" on Tandem's going concern basis in the accounts, suggesting it is concerned about the company's ability to survive. PwC says Tandem's need to raise additional funding "may cast significant doubt on about the company's ability to continue as a going concern."

Tandem CEO Ricky Knox told Business Insider: "The Harrods Bank acquisition brings £80m of new capital into the combined Tandem and Harrods Bank business, which means no further money is needed for the time being.

"PwC is highlighting a risk only in the case that the acquisition doesn’t close given that it is still subject to regulatory approval. Tandem remains fully confident that the deal will go ahead."

He added: "Tandem would like to add an investor or two that they think can bring strategic value to the business, but if they can’t find anyone appropriate then existing investors will fully fund the round."

Tandem has raised close to £40 million from investors including eBay founder Pierre Omidyar, Route66 Ventures, and crowdfunding investors on Seedrs.

Despite its licensing setback, Tandem asserts in its accounts that its "intention is to regain a deposit-taking licence and achieve its original strategic aims."