Fintech/News/ Monzo gets £60m fundraise over the line; confirms 40% valuation drop The round has been in the works for a number of months but was delayed by the pandemic. By Isabel Woodford 16 June 2020 Tom Blomfield, cofounder, Monzo Tom Blomfield, cofounder, Monzo \Fintech Monzo revenues surge more than twofold, putting it on track for 2023 profitability By Amy O'Brien 30 January 2023 Fintech/News/ Monzo gets £60m fundraise over the line; confirms 40% valuation drop The round has been in the works for a number of months but was delayed by the pandemic. By Isabel Woodford 16 June 2020 London’s digital bank Monzo has closed a much-awaited £60m raise at a £1.25bn valuation — a 40% drop from its previous round. The news, first reported by Business Insider, comes after months of funding delays for the bank and speculation about a down round. Several VCs told Sifted earlier this year that Monzo and its peers had been struggling with “challenger bank fatigue” among wary investors, delaying the raise even before the UK lockdown took hold. There are two new known investors in the most recent round — Switzerland’s Reference Capital and Vanderbilt University — while the remaining funds were made up by Monzo’s existing backers, including Y Combinator, Accel, Thrive Capital and Passion Capital. Monzo confirmed the news to Sifted, but would not disclose what proportion of the funds came from non-existing investors. The fundraise is likely to have provided a top-up to the bank’s balance sheet, which now stands at £175m in liquid capital (as a licensed bank, it is required to hold at least 8% of its risk-weighted assets in liquid cash). A smaller, second tranche of funding is now expected to close in the coming months, to further fuel Monzo’s growth beyond its existing 4m users. Indeed, the company was originally expected to raise $130m. There are no expected changes to the board. Down but not out Monzo’s dampened valuation has raised eyebrows in the industry, given Monzo’s position as the golden child of UK fintech. At its previous valuation in June 2019, Monzo became UK’s second most valuable startup at £2bn. However, the VCs that Sifted spoke to argued that down rounds weren’t a reliable indicator of a company’s future. One said: “It’s tough on teams, it’s tough on morale. But we’ve seen companies do down or flat rounds that go on to do great things. Uber famously had a round that was a flat round, and people were like ‘oh no, this is the end of Uber’. Looking back on it, the folks that participated in that round did very well.” The same person added: “It’s not necessarily a death pill for these companies, it’s a rationalisation and an adjustment and the broader tech world has shown that it’s recoverable.” The raise has also taken place within the context of the coronavirus, which has diluted investor appetite, prompting Monzo to lay off over 80 staff and spurring a dip in user signups. Regardless, Monzo will now be focused on securing plans to be cash-flow positive by late 2021, propelled by a new leadership body. These include banking veteran TS Anil, who has replaced founder Tom Blomfield as chief executive, and former Deliveroo executive Mike Hudack, who quietly joined Monzo as chief product officer earlier this year. Monzo also snagged Sujata Bhatia from American Express, who began this week as chief operating officer following a torrent of executive departures. Related Articles Monzo hit by 40% valuation drop in latest fundraising By Isabel Woodford Click here to read more Inside Revolut and Monzo’s mammoth funding rounds By Isabel Woodford Click here to read more Fintech in coronatimes: Why some sub-sectors are especially vulnerable in a downturn By Isabel Woodford Click here to read more Most Read 1 \Startup Life Tech Nation shutting down as UK government controversially pulls key funding 2 \Fintech Monzo revenues surge more than twofold, putting it on track for 2023 profitability 3 \Consumer Glovo lays off 6% of staff following fresh fine from Spanish government 4 \Startup Life How we grew our team 5x without spending £1 on recruitment 5 \Venture Capital France plans to use the startup downturn to come out on top in Europe
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