Monzo has now raised 125 million pounds ($167.3 million) during the pandemic. The company also now has over 4.8 million customers, including over 60,000 business users, and over 100,000 in its paid-for current accounts Monzo Plus and Monzo Premium, according to the report.
The company’s valuation after this funding round is now 1.2 billion pounds ($1.6 billion).
The new valuation is lower than the previous one, so industry observers see this as a down round, TechCrunch reported, and the previous valuation may have been overheated since the pandemic skewed things for businesses globally.
A down round, according to PYMNTS, is when a private company taps the market for fundraising, usually selling equity and coming back with lower valuations than before. Monzo’s previous round was for 40 percent less than its 2019 valuation, and the pandemic’s effects hobbled the bank’s efforts to expand more overseas.
Due to the pandemic, Monzo suffered reduced card spend both at home and abroad, meaning less revenue for interchange fees coming in, according to TechCrunch. That manifested through furloughs and layoffs because of the economic strife, alongside U.S. layoffs and the closing of the bank’s Las Vegas office.
But others, TechCrunch reported, could see this as a “legitimate FinTech market correction.”
PYMNTS reported that down rounds can sometimes be a sign of caution, with investors only looking to spend if they can get more for their money.
Deliveroo and Stripe investor Novator, Kaiser and TED Global were among the new investors for this round. Existing investor Goodwater also contributed. Other existing investors Y Combinator, General Catalyst, Accel, Passion, Thrive and Stripe reinvested earlier in the year, TechCrunch reported.