Monzo hits $5bn valuation with new funding round led by Alphabet’s CapitalG
Monzo has secured a new $430m (£339m) funding round led by Alphabet-owned CapitalG valuing the digital challenger bank at $5bn (£3.9bn).
The firm was previously valued at $4.5bn (£3.5bn) in 2021 after a funding deal with investors including Tencent and the Abu Dhabi Growth Fund.
Other backers in the new funding round include Chinese venture capital firm HongShan and existing investors Tencent and Passion Capital.
Chief executive TS Anil said Monzo would use the funding to return to the US market. The firm hired Conor Walsh as its new US chief executive last October.
In 2021, US regulators told Monzo, which is a fully licenced bank in the UK, that it was unlikely to secure a licence across the pond after two years of negotiations.
Monzo has since focused on partnering with banks that are licenced in the US to bypass the requirements.
Anil said in December that there was a “huge gap” in the US, which was “very large with attractive economics”. He added: “And it’s one of the few markets in the world… where you don’t need share to get scale.”
The bank is also considering expanding into Europe but has not yet announced any formal plans.
“Banking is still in the infancy of its transformation and we are seen as an outlier in pole position to win,” Anil told the Financial Times on Tuesday.
“I think of this as a race to transform how customers interact with their money, to win at a global scale.”
He added: “Through much of last year inbound interest was incredibly strong, so towards the end of the year we decided to crystallise it.”
Monzo expects to become profitable in 2024. It posted a £116m pretax loss in 2023, driven by higher loan loss impairments from its buy-now pay-later offering.
The bank announced last month that it had hit nine million UK retail customers, with two million added last year alone.
Fintech valuations broadly peaked in 2021, with the sector since struggling with interest rate hikes and higher funding costs, triggering a wave of consolidation.
Anil said Monzo had been approached by smaller firms looking to be acquired, with the bank “open” to M&A.
News of the valuation uplift comes amid expectations that Monzo will eventually launch a blockbuster public listing in London or New York.
Anil has hinted that the firm will float at some point but on Tuesday remained tight-lipped about the timing or location, saying it was “too early” to discuss.
City PM understands that a team at Magic Circle law firm Freshfields is advising CapitalG and Google Ventures on the investment announced today.