Monzo is now valued at $4.5 billion after new funding round

Monzo is now valued at $4.5 billion after a new funding round led by Abu Dhabi Growth Fund.
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Monzo Debit Card

UK based digital bank Monzo, founded in 2015, has just closed a new funding round which has raised more than $500 million (£377 million). The company is now valued at $4.5 billion (£3.4 billion).

This funding round was led by Abu Dhabi Growth, it also included new investors Coatue and Alpha Wave Ventures and Accel and Goodwater which are investors from previous rounds.

During the pandemic Monzo had its valuation reduced by as much as 40%, seeing it reach £1.25 billion. The pandemic caused many issues for Monzo, during 2020 the bank reported a net loss of £130 million which was an increase from 2019 and there were warnings of a “material uncertainty” for Monzo to continue operating. Monzo is still yet to reach profitability and it has struggled to increase revenues, but now it would appear the situation as a whole is improving for the bank.

Monzo CEO, TS Anil has said:

“This investment means we’ll grow further and faster as we continue on our journey to reinvent banking, and become the one app that sits at the centre of our customers’ financial lives,”

At the time of writing, Monzo has over 5.7 million customers and the bank was the 4th most switched to the bank in the 2nd quarter this year. Monzo had a net gain of 5,707 customers from the current account switch service. Halifax was at the top with a net gain of 16,684 and Monzo rival Starling Bank came in second with a net gain of 13,720.

For quite a while Monzo has been attempting to expand into the United States, but earlier this year the bank announced it has cancelled its application for a banking licence in the US. Despite cancelling the banking licence application in the US, Monzo appears to remain committed to the country.

In the UK Monzo has seen some big changes this year, including new products. The company says it had doubled revenues in 2021 and over 300,000 customers are now using paid accounts (Monzo Plus and Premium).

For a while, Monzo has also been very conservative with its lending, but now it is expanding into more lending products with the recent launch of Monzo Flex, which is a Buy Now Pay Later offering that lets customers spread eligible transactions out over 3 months interest-free or up to 12 months with interest. It differs from offerings from companies such as Klarna for example due to the fact Monzo Flex acts more like a credit card, customers only need to apply once and are then given a credit limit, Monzo Flex now also includes a Virtual Card.

The Financial Times reported that people familiar with the matter told them that Monzo may be exploring new products such as investing in stocks and even cryptocurrency trading, however, nothing is confirmed yet.

It is likely new offerings from Monzo will arrive in the near future as the bank looks for more ways to increase its revenue on its path towards profitability. It was also previously reported earlier this year that Monzo may be getting close to an IPO.

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