London-based digital bank Monzo has confirmed a fresh funding round of £60 million (around $75.89 million) with a valuation of £1.25 billion ($1.58 billion) – a 40 percent drop from its previous valuation of £2 billion ($2.44 billion).
Mostly, the fintech’s existing investors, including Y Combinator, General Catalyst, Accel, Stripe, Thrive Capital, Orange Ventures, Goodwater Capital, and Passion Capital, participated in the round. But there is an addition of at least two new participants – Swiss fund Reference Capital and Vanderbilt University.
Monzo’s attempt to lure investors with a discounted valuation was already reported last month.
In the previous funding round closed last June, the company was valued at over £2 billion, making it the second most valued fintech in the UK. The latest valuation drop drags the firm closer to its 2018 levels.
Though not cleared out by the British fintech, this round is believed to be the first of the two – another £40 million ( $50.5 million) is expected to be closed in the coming months, putting the total fresh funding at £100 ($126.5 million)
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With more than 4 million customers, Monzo is a major fintech disrupter in the UK, but it is still highly unprofitable. The company is also eying to step into the US market and already applied for a US banking license, the approval for which might take around 12 to 18 months.
A lot has happened at Monzo
The confirmation of the funding came a couple of weeks after the company laid off 120 staff from its UK office due to the economic hardships.
The company already shuttered its Las Vegas office and furloughed 300 UK-based staff earlier due to COVID-19.
Last month, there was also a shakeup in the digital bank’s leadership as its poster boy co-founder Tom Blomfield was replaced by veteran banker TS Anil.
Meanwhile, The Guardian recently reported that Monzo is freezing its customers’ accounts without noticing them, defying the advisory of the Financial Conduct Authority (FCA) to the banks to help the customers through the COVID-19 crisis.