Monzo reportedly raising £300m funding after scrapping US banking licence plans

Despite a tricky year that has seen its losses widen, US banking licence plans shelved and an investigation into its financial crime practices launched by the FCA, Monzo is said to be working on a fresh multi-million-pound funding round.

According to Sky News, Monzo is discussing with new and existing investors about raising a fresh £300m funding round—£200m of which would come from new shareholders.

The cash would be raised at a valuation of £3bn, almost three times what it last raised funding at in June 2020, when the bank raised £125m at a £1.1bn valuation.

This so-called ‘down round was at a lower price tag than its 2019 funding when the bank was valued at £2bn, largely due to Monzo’s poor positioning at the start of the Covid pandemic with its overreliance on interchange fees from card payments.

Business Insider also reported that a funding round is in progress, although it quoted a higher £400m raise at a valuation of up to £4bn.

Despite its setbacks, Monzo’s now higher valuation discussions are said to be based around growing revenues, which rose from £67m in 2020 to £79m in 2021.

The bank also last month launched its first buy now, pay later product, with the launch of Monzo Flex.

In October Monzo withdrew its US banking licence application after the local financial regulator told the bank it was unlikely to be approved.

Monzo said the news “isn’t the outcome we initially set out to achieve” but remained committed to America saying “we have big ambitions for Monzo US”.

From the bank’s 2021 results we learned that in the US Monzo had just 22 full-time employees and around 4,000 customers, costing the bank around £543,000.

At the start of this year, Monzo appointed a new US CEO Carol Nelson to refocus its plan for America.

Monzo declined to comment.