Alphabet wants to invest in British fintech bank Monzo before it goes public
- Monzo, a UK fintech bank, is in talks with Alphabet’s investment arm, Capital G, to raise new capital.
- According to two sources familiar with the matter, a potential deal could value Monzo at around $5 billion.
- Secondary share sales have increased in response to reports of new funding and an impending IPO.
Monzo, a British fintech bank, is in talks with Alphabet’s private investment arm Capital G to raise its final funding round before going public.
Two sources familiar with the matter confirmed to Business Insider that the London-based neobank, founded in 2015, is set to raise between $376 million and $625 million at an increased valuation of around $5 billion. Sky News broke the news of the round first.
Monzo most recently raised $4.5 billion in a deal led by the Abu Dhabi Growth Fund in December 2021. The bank has approximately 8.5 million customers in the United Kingdom and is best known for its bright coral pink bank cards.
The proposed Capital G investment has not yet been confirmed or finalized, so figures may change. It was also reported that existing investors in the company, including New York private equity fund Coatue and Silicon Valley venture capital firm General Catalyst, may be interested in joining the new round.
Monzo did not respond. A request for comment was not returned by Capital G.
Monzo’s upround would be one of only a few bright spots for fintech in 2023, which has seen a significant drop in funding. According to Finch Capital, fintech funding in Europe fell 70% to $5 billion in the first half of 2023, from $17.1 billion in the same period in 2022.
According to S&P, other mature fintech startups have been forced to accept valuation cuts in order to sustain growth.
The proposed funding round is expected to be the fintech’s final private raise before a possible public debut in late 2024 or 2025.
Secondary share sales in Monzo have increased in recent weeks, boosted by reports of an impending IPO, according to one source familiar with the matter. According to the source, secondary shares in the company have been sold at a valuation of around £3.5 billion ($4.3 billion), with some early investors in the company selling down portions of their stakes in Monzo.
Tencent also backed Monzo with an additional $100 million investment as part of its December 2021 round. That agreement, reached during a period of pandemic-era hype, represented a significant turnaround for a company that had accepted a downround in June 2020.
In the United Kingdom, Monzo competes with other London-based neobanking firms such as $33 billion-valued Revolut, which has yet to obtain a UK banking license, and Starling Bank, which is in the process of hiring a new permanent CEO.
Monzo is eager to succeed in international expansion, having attempted and failed to obtain a US banking license in 2021. Since then, the fintech has hired Cash App’s former global product chief Conor Walsh to lead a renewed effort to expand in the United States.
Despite more than doubling its revenue, the British bank lost £116.3 million last year. Monzo CEO TS Anil, on the other hand, has stated that the bank will be profitable this year.
