The market is just starting to recover from COVID-19’s impact. While many expected that funding rounds would be far and few, we reported that the VCs are as eager as ever to invest in promising companies. The latest example of this is the UK challenger bank Monzo, which has announced raising €66.8M in the latest bridge funding round. Even though fresh funds are good news for the company, not everything is rosy.
New bridge funding but share pricing remains the same
The latest funding round was backed by Monzo’s existing investors Y Combinator, General Catalyst, Accel, Stripe, Goodwater, Orange, Thrive and Passion Capital. Some new investors such as Reference Capital and Vanderbilt University participated as well. While raising fresh funds is good news for the bank, the share pricing for people who invested in the company back in 2018 hasn’t changed.
The latest raise was a down round for Monzo since its pre-funding evaluation stood at €1.38 million, compared to the €2.2 billion post-funding evaluation, back in 2019. This is a 40 percent hit and is most likely a result of the current market conditions due to the coronavirus crisis. Shares of the company remain £7.7145 (€8.6 approx) for those who invested in the crowdfunding round for the company’s share back in December 2018.
“Closing a new round is great news for Monzo. Our investors continue to support our mission to make money work for everyone. This means we can keep growing and building products that give people more control over their money – even in the current economic climate.” The VP Marketing at Monzo, Tristan Thomas, writes in a post. “As well as raising new funding, we’ve also given investors who invested in our Series F funding round last year additional shares to put them in the same position as if they’d invested then at a share price of £7.7145.”
Turbulent times for Monzo
The coronavirus has a drastic effect on many businesses and Monzo was not untouched by it. The company planned to lay off up to 120 people at its U.K office but the tally is said to be around 80. Earlier, it had to do layoffs in the US and shut down its Las Vegas-based customer support office. Furthermore, the bank had almost furloughed about 300 of its employees in the U.K.
Things are now looking up for Monzo. its business banking product was launched back in March this year and it has now reached 25,000 signups. Aimed at sole traders and SMEs, the company’s business bank accounts come with free and premium options, which offer varying sets of features. Monzo is a London-based digital banking startup that was founded back in 2015. Founders of the company are Tom Blomfield, Paul Rippon, Gary Dolman, Jonas Huckestein, and Jason Bates.
Image Credits: Monzo