Monzo, a digital bank, has defied the downward trend in fintech valuations to secure a £4billion price tag for its latest fundraising round.
The capitalG investment arm of Alphabet-owner Google, which is new to the lender in London, led the new funding with £340 million. HongShan, a Chinese venture capital company, has also joined the team. Existing investors, including China’s Tencent technology giant, have also contributed to the fund-raising.
This is good news for privately-owned Monzo which was valued around £3.5 billion at its last funding round of 2021. In recent years, the valuations of other fintech and technology companies have fallen as interest rates rose rapidly in late 2021. This ended the era where money was cheap and prompted investors to focus more on profits and less on growth companies.
Klarna is a Swedish company that offers a buy-now, pay-later service. Its valuation plummeted from $45.6 billion to $6.7 billion by July 2022, a little over a year ago.
Monzo, founded in 2015, is yet to make an annual profit. However, TS Ail has stated that the company will surpass this milestone by the end of the year. Last year, it suffered a loss of £116.3m after setting aside £101.2m to cover an increase in bad loans. This was partly due to the group’s move into the market for buy now pay later.
Monzo is a digital-only lender that is trying to shake off the hold of the incumbent high street banks on the banking sector. It has grown quickly and boasts over nine million retail clients and around 400,000 business customers.
It has raised new funding to try and break into the American Market. Anil, 52 years old, joined Monzo 2020 to help the bank build a business in the United States. Anil, 52, was promoted as Monzo’s CEO after this plan failed. The company is looking to make another push across the Atlantic. Last year, it hired a US Chief Executive.
Anil said that the new funding is “rocket-fuel” for the growth ambitions of the bank.
Gene Frantz of CapitalG described Monzo as “exceptional”. He said: “In a banking industry rife in stagnation and lackluster customer service, Monzo is the innovative customer-centric bank consumers have been longing for.”
It is believed that the bank could become a candidate to be listed on a stock exchange in the near future. However, there have been rumors about it being acquired by a competitor.