Monzo targets £4bn valuation in fresh funding round

Unlock the Editor’s Digest for free

Monzo is nearing a new round of funding that would value the British digital bank at about £4bn, according to people familiar with the matter, in a sign of investor confidence in its expanding business.

The UK fintech could finalise a deal as soon as the next two weeks to raise as much as £350mn from a mix of new and existing investors, the people said. The company would be valued at about £3.6bn on a so-called pre-money basis and about £4bn with the fresh capital taken into account.

Alphabet investment fund CapitalG is set to lead the round, with participation from investors including China’s Tencent and the US fintech investor Ribbit Capital. HongShan, the Chinese venture capital giant that split from Sequoia Capital last year, also plans to join the financing alongside others, the people said.

The company previously raised funding in 2021 at a valuation of about £3.5bn from backers including Tencent, the Abu Dhabi Growth Fund, Coatue and Accel.

A bump in valuation for Monzo would mark an improving climate for financial technology start-ups, following a period of turbulence amid rising interest rates and regulatory scrutiny. In recent years investors have turned against fast-growing, cash-hungry companies, with venture capital start-up funding sinking last year.

Founded in 2015 and best known for its coral pink debit cards, London-based Monzo has since expanded into new products and markets. It is active in the US and has offerings such as a buy now, pay later service and an investment platform.

Monzo announced in recent days that it had surpassed 9mn customers after adding 2mn in 2023, with more than 380,000 business customers.

The company reported last May that its revenue had more than doubled to £355.6mn over the year to the end of February 2023, driven by higher interest rates on its deposits and its lending book tripling to £759.7mn.

However, the bank made a pre-tax loss of £116mn in the same period, in part as the rapid increase in lending forced it to expand its provisions for potential bad loans.

At the time, Monzo’s chief executive TS Anil said the bank had made an unspecified profit in March, and expected to hit annual profitability in its next financial year.

CapitalG is an independent fund solely backed by Alphabet that invests in start-ups at the later stages of development. It has previously invested in the likes of Stripe and Airbnb.

Monzo declined to comment. Representatives for CapitalG, Tencent, Ribbit and HongShan did not immediately respond to requests for comment.

Other media reported in November that Monzo was in talks with CapitalG.

Articles You May Like

Rodriguez named to head DASNY
Musk predicts AI will overtake human intelligence next year
Ex-Post Office chief claimed sub-postmasters were tempted to steal, inquiry told
How soon will machines outsmart humans? The biggest brains in AI disagree
Resurgent inflation looms over Biden’s White House bid