Monzo Confirms $ 4.5 Billion Valuation After New $ 500 Million Funding Closes
Monzo, one of the UK’s leading digital banks, closed a $ 500 million fundraising round at an increased valuation of $ 4.5 billion, the company confirmed.
It will be a sigh of relief for fintech, which suffered a series of setbacks in 2020 – including a reduction in valuation, struggling to break through in the United States, and heavy financial losses.
The increase included new investors like Abu Dhabi Growth Fund, Coatue and Alpha Wave Ventures. The new funds will be used to support the creation of new products, including a trading platform, and to cover its burn rate.
Monzo’s continued growth through Covid has proven key to courting investors, the company told the Financial Times. Last year, Monzo got 1 million new customers and an 18% increase in revenue. This was helped by a new subscription line and the launch of its business line.
With 4.5 billion dollars, Monzo is now the third most valued European neobank, behind Revolut and N26. This is a 200% increase from its 2020 valuation and a 182% improvement from its 2018 pre-monetary valuation.
However, Monzo’s new price tag falls short of the tantalizing ratings of other fintechs, prompting Monzo to lower the rankings in Europe, which is now home to around 40 fintech unicorns.
Investors will note that Monzo is one of the last UK neobanks to break even, signaling that there was “significant uncertainty” about its future in its latest accounts. FinTech also revealed that it was under investigation by regulators for his money laundering measures after failing to catch nearly Â£ 10million in customer fraud.
Still, Monzo has outlived groups like Tandem – which was effectively taken over by a private equity firm last year – and has grown faster than Lunar in the Nordic countries or Bunq in Holland.
Monzo is now focused on growing its user base, lending and increasing revenue. He’s pinning his hopes on Monzo Flex, his new buy now, pay later feature that lets customers split card payments into installments, taking on Klarna.
Monzo executives also told Sifted earlier this year that they expected the company to go public soon.
Founded in 2015, Monzo now has over 5 million UK customers, with an average deposit per user of Â£ 620 in February of this year. Monzo also holds the largest market share among digital banking users in the UK, with 39%.
The latest increase brings Monzo’s total funding to over Â£ 900million.
Some of its biggest backers include Passion Capital, which now owns just under 25% of the bank. Investors who joined Monzo in its previous round will have benefited the most from the new valuation. These include Octahedron Capital, Kaiser Permanente Ventures, and Vanderbilt University.