London-based fintech company Monzo has raised $430m (£340m) in a late-stage funding round, confirming a report in the Financial Times a few weeks ago. Following this round, the company's post-money valuation reached $5bn (£4bn). Founded in 2015, Monzo offers UK current accounts, debit cards and several financial products with a digital-first approach.
Today's investment is important information because large funding rounds have become rare over the past year or so unless you're working on an AI-based model.
As a reminder, Atomico's latest report on the state of technology in Europe estimates that startup funding will grow to $45 billion in 2023, compared to $82 billion in 2022 and $100 billion in 2021. It is decreasing. American venture capital firms are exiting European investments and investments from crossover investors such as: Tiger Global and Coatue have significantly slowed down the pace of their investments in tech startups.
That's why Monzo is kind of defying the odds with this new round of funding, in which Google plays a big role. CapitalG, Google's parent company Alphabet's growth fund, is leading the round. Google's venture fund GV is also participating, as are existing backers such as HongShan Capital (the VC firm formerly known as Sequoia Capital China), Passion Capital and Tencent.
Still, Monzo's trajectory hasn't always been an upward trajectory. After growing well in its home market, the company attempted to expand into other markets, including the US, but ultimately ended up closing its US team and refocusing on the UK.
We had to raise a down round in 2020. This means that the total valuation has decreased between the two funding rounds. A few months later, iconic founder and CEO Tom Bromfield left the challenger bank. He is currently a partner at Y Combinator.
Thanks in part to rising interest rates, the company's performance improved rapidly. The startup currently generates revenue from cash and central bank balances. Monzo reached a post-money valuation of $4.5 billion in 2022.
Monzo currently has 9 million retail customers in the UK, and the company grew by 2 million customers in 2023 alone. He also has 400,000 businesses that use Monzo for their banking needs.
In addition to checking accounts and debit cards, Monzo has diversified its product portfolio with a savings account, access to three investment funds (ETFs), and several credit products. Fundamentally, Monzo still believes in building a one-stop shop for all your financial needs. The company says it will become profitable in March 2023.