Monzo digital bank could double value to £2bn with new US stake
Fast-growing digital bank Monzo is set to raise fresh funds from a US investor that could double its value to £2bn in a deal that will make it the second largest fintech startup in Britain.
The challengerbank, which has won 1.2 million customers since launch in 2015, is reportedly close to clinching £100m from a new but unnamed American investor just months after raising £20m in a crowdfunding campaign that involved many of its customers.
If the new investment goes ahead, Monzo will leapfrog rival Revolut as the UK’s second most valuable fintech startup, behind small business lender OakNorth.
The new investment also suggests that the 36,000 small investors who took part in the crowdfunding may already be sitting on significant paper gains, with Monzo’s popular community forum buzzing with the news.
A user identified as a crowdfunding investor on Monzo’s community forum said the shares would probably be worth “£12-14 minimum now, if the news of an increased valuation is true”. At the time of the crowdfunding, the shares were valued at around £7.70, although the shares are not tradable.
Another asked: “How much are Round One investors smiling today?” User bretonhill, also tagged as a crowdfunding investor, replied: “Personally, I can tell you: a lot. Lovely news to wake up to on a lazy Sunday!”
It also prompted speculation over a near-term stock market flotation for Monzo. However the bank has yet to report a profit, and recorded a £33.1m pretax loss in the year to February 2018, up from a £7.9m loss a year earlier, due to higher operating costs.
The Sunday Times, which first reported news of the investment, said Monzo’s board of directors have already approved the American’s cash injection, but warned of a potential delay. Monzo could be waiting months for regulatory approval from the City’s Prudential Regulation Authority.
Monzo did not respond to requests for comment.
Monzo was forced to defend its crowdfunding efforts late last year, after it was accused of allowing customers to borrow from the bank using its overdraft facility – which costs 50p a day – to buy shares.
Companies are banned from lending money to customers to help them buy the firm’s shares. It is meant to avoid the creation of false markets, though the use of overdrafts is not covered by the rules.