Monzo Nears £4 Billion Valuation with New Funding Round

Monzo is reportedly close to securing a new round of funding worth up to £350 million, which could value the company at around £4 billion.

Investors are showing their faith in Monzo’s growth as the British digital bank is reportedly closing in on a new round of funding that could value the company at around £4 billion.

The UK fintech might finalize a deal to fund up to £350 million from a combination of new and existing investors over the next two weeks, according to the individuals. If the new funding were factored in, the company’s worth would rise to around £4 billion, from £3.6 billion on the so-called pre-money basis.

The deal will be led by Alphabet investment vehicle CapitalG and will include participants such as Ribbit Capital, an American financial technology investor, and Tencent, a Chinese digital company. According to the sources, HongShan, a prominent Chinese venture capital firm that broke from Sequoia Capital last year, is also planning to participate in the funding round.

Tencent, Accel, Coatue, and the Abu Dhabi Growth Fund were among the backers who helped the firm finance £3.5 billion in 2021.

Following a period of instability due to increasing interest rates and regulatory scrutiny, a rise in Monzo’s valuation would indicate an improving climate for financial technology start-ups. Venture capital start-up investment plummeted last year, continuing a trend of investors shunning rapidly expanding businesses with a penchant for rapid expansion and excessive spending.

Established in 2015 and first recognized for its coral-colored debit cards, Monzo, headquartered in London, has subsequently branched out into other markets and products. It operates in the United States and provides services like an investment platform and a buy-now, pay-later service.

More than 380,000 businesses are Monzo customers, and the company recently stated that its customer base had grown to over 9 million, with an additional 2 million users added in 2023.

As a result of increased interest rates on deposits and a tripling of its lending book to £759.7mn, the company’s revenue more than quadrupled to £355.6mn in the year ending in February 2023, as reported last May.

The fast growth in lending, however, necessitated an increase in provisions for possible bad loans, which contributed to the bank’s pre-tax loss of £116mn during the same period.

The head of Monzo, TS Anil, announced the bank’s March profit at the time and predicted that it will reach yearly profitability in the next fiscal year.

Investments in late-stage startups are made by CapitalG, an independent fund that is fully backed by Alphabet. Stripe and Airbnb are among its earlier investments.

“Monzo will not comment,” he said. Requests for comment were not promptly addressed by representatives of CapitalG, Tencent, Ribbit, and HongShan.