London-based fintech company Monzo has raised a final-stage funding round of $430 million (£340 million), confirming a report from the Financial Times a few weeks ago. Following this round, the company reached a post-money valuation of $5 billion (£4 billion). 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, as large funding rounds have become rare over the past few years, except when working on AI-based models.
According to Atomico’s latest report on the state of technology in Europe, startup funding has decreased to $45 billion in 2023, compared to $82 billion in 2022 and $100 billion in 2021. We have significantly slowed down our investment in technology startups like Tiger Global and Coatue.
That’s why Monzo is defying the odds with a new funding round, with Google playing a big role in this investment. CapitalG, the growth fund of Google parent company Alphabet, is leading this round. GV, Google’s venture fund, is also participating, and existing sponsors such as Hongsan Capital (VC formerly known as Sequoia Capital China), Fashion Capital, and Tencent are also participating.
But Monzo’s trajectory is not always upward to the right. After growing nicely in its home market, the company attempted to expand into other markets, including the US, but Monzo ended up closing its US team and refocusing on the UK.
In 2020, it had to raise to a down-round, meaning its total value fell between the two funding rounds. A few months later, iconic founder and CEO Tom Blomfield left the challenger bank. He is currently a partner at Y Combinator.
The company’s performance improved rapidly, partly due to rising interest rates. The startup now generates revenue through central bank cash and balances. Monzo reached a post-money valuation of $4.5 billion in 2022.
Monzo has 9 million retail customers in the UK. In 2023 alone, the company added 2 million customers. Additionally, there are 400,000 companies that use Monzo for their business banking needs.
In addition to checking accounts and debit cards, Monzo has diversified its product portfolio with access to savings accounts, three investment funds (ETFs) and some credit products. In essence, Monzo still believes in building a one-stop shop for all your financial needs. The company said it was profitable in March 2023.