Challenger bank Monzo raises £20m
Technology-focussed challenger bank Monzo revealed details of a mammoth new funding round on Thursday, confirming details that had been circulating in City chatter since earlier in the week.
The startup said it raised a total of £19.5m, with £13m coming from US-based Thrive Capital, £5m from Passion Capital and £1.5m from Orange Digital Ventures.
Monzo also confirmed it was planning another equity crowdfunding round via Crowdcube to raise £2.5m, which - combined with the £65m confirmed on Thursday - valued the firm at £65m in pre-money terms.
It would be the second crowdfunding effort from the app-based bank, which pulled together £1m in record time in early 2016.
“Monzo will host a pre-registration period from 28 February to 14 March, when any of its customers can express their interest in investing,” the company confirmed.
“The total amount pledged will be displayed in real-time on Monzo’s website, followed by a ballot to randomly select the people who’ll be able to authorise their investments from 14 March.”
It said the funding would be used to prepare for launch as a full bank later in the year.
At present, Monzo is servicing its over 100,000 users with a prepaid MasterCard controlled from an app available to iOS and Android devices.
The card offers customers the ability to track transactions in real-time, see where they spent their money on a map, budget by spending category, and get warnings if they overextend themselves.
It was also attracting customers with the promise of free card transactions in any country, giving consumers one of the best forex deals available by directly charging MasterCard’s interbank rate, with no add-on fees.
Once full bank status is achieved, Monzo said it was planning to create revenue by offering “transparent overdrafts”, without hidden fees and charges.
Beyond that, the company said it wanted to move away from what are seen as “traditional” banking products in the long term, and create a “marketplace” of banking products where consumers can access a range of third-party financial products from the single app.