Monzo, a British digital banking platform, is approaching investors for fresh funding with a valuation discount of almost 40 percent, Financial Times reported on Friday.
Citing “several people familiar with the negotiations”, the publication detailed that the digital bank is almost to strike the investment deal with a valuation of around £1.25 billion (around $1.53 billion), compared to a valuation of more than £2 billion ($2.44 billion) in the latest funding round of the startup bank last June.
The massive slash in the valuation is primarily due to the pressure on the business due to the ongoing Coronavirus crisis.
Slash in valuation to woo investors
Still a loss-making company, Monzo is looking to raise between £70 million (almost $85.5 million) and £80 million ($97.71 million). This amount will secure the company’s cash position into the second half of next year when it is planning to book profits.
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Monzo was already planning to secure funds even before the pandemic and is expected to close the round within the next month.
The report also detailed that the majority of the new funding will come from existing investors of the banking startup which include names like Accel, Y Combinator Continuity, and Goodwater Capital, and Passion Capital.
Launched in 2015, Monzo raised £324.7 (around $396.2 million) in total to date, closing its Series F funding round last June after securing £113 ($137.88 million). The round was led by Y Combinator along with participation from 10 other entities, according to Crunchbase.
Notably, with the pandemic-stalled economy, Monzo has furloughed some 295 staff and closed a Las Vegas support office smashing 165 employees. Its CEO Tom Blomfield is also forgoing his a year’s salary to weather down the losses.
Meanwhile, N26, a German challenger bank, has recently raised over $100 million in an extension of its Series D funding round with a valuation of $3.5 billion, Finance Magnates reported.