Digital bank Monzo asks investors for additional £100m for growth plans

Tom Blomfield

Monzo is looking to raise up to £100 million to support its growth and it is reported that the digital bank is in talks with investors to extend a funding round that was launched in June.

In June the funding raise brought in £113 million and doubled its valuation to more than £2 billion.

It is understood to be in talks with investors who participated in June’s so-called series F round, as well as potential new backers, with a view to raising a further £50 million to £100 million.

Monzo was founded in 2015 and is among several digital banks seeking to disrupt the industry by luring customers from the familiar high street players. It has become known for its coral-coloured debit cards and mobile app allowing users to hold savings in different pots.

It is not clear yet what valuation its latest fundraising, which was first reported in The Mail on Sunday, will ascribe to Monzo. Its previous fundraising in the summer was led by Y Combinator Continuity, an American start-up accelerator. Existing investors also include Accel, Stripe and Orange Digital Ventures. It is thought that the company is considering a new “series G” funding round next year.

Monzo has raised about £310 million since it was created by Tom Blomfield, 34, an entrepreneur and former employee of Starling, a rival. It gained its British banking licence in 2017.

Total customer deposits rose to £461.8 million from £71.3 million in the year to February and customer numbers almost trebled to 1.6 million. That helped to increase net revenue to £9.2 million from £1.8 million, but its losses deepened to £50.7 million from £33.1 million as it more than doubled its workforce to more than 700 people.

Customer numbers have increased to 3.6 million since the annual results and they are on track to jump to six million next year. In June Mr Blomfield said that losses were likely to rise further this year as the bank invested in advertising to boost its growth. He told the Financial Times that Monzo was “pretty comfortable we’re well capitalised for the next few years.”

He said then that “we can choose to do less stuff, expand less internationally and hire fewer people. Those actions would adjust the trajectory towards higher profitability much faster, but I think it would damage the long-term value of the company.”

Monzo declined to comment on the fundraising reports.