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After a year of losses and money laundering investigations, Monzo plans to use the fresh funding for product development and to cover its burn rate.
Monzo, the UK-based digital bank, has hit a valuation of $4.5bn after raising $500m in its latest funding round.
This comes after the Revolut and N26 competitor suffered significant losses earlier this year and was investigated for anti-money laundering compliance shortcomings by the UK’s top watchdog.
The funding round was led by the Abu Dhabi Growth Fund, which also led e-scooter company Lime’s $523m funding round last month. Monzo was also backed by new investors including New York-based Coatue.
It marks a fresh vote of confidence from investors for Europe’s third most valuable neobank, as Monzo trails behind Revolut (valued at $33bn) and Berlin-based N26 (valued at $9bn after a $900m funding round in October).
The funding will go towards investment in building new products, including Monzo’s own trading platform, and covering its burn rate, according to Sifted.
“This investment means we’ll grow further and faster as we continue on our journey to reinvent banking, and become the one app that sits at the centre of our customers’ financial lives,” TS Anil, CEO of Monzo, said in a statement given to Reuters.
Monzo told the Financial Times that its continued growth even during the pandemic helped investors gain confidence in the digital bank, culminating in this funding round despite the setbacks earlier in the year.
Monzo secured 1m new customers last year, according to Sifted, along with an 18pc increase in revenue. The start-up, founded in 2015, now has more than 5.7m account holders.
In September, Monzo stepped into the increasingly competitive ‘buy now, pay later’ market with its own service, Monzo Flex, which allows users to spread the cost of their purchases over three months interest-free. In July, Monzo COO Sujata Bhatia hinted at a possible IPO coming soon.
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