UK neobank Monzo has raised a £71 million ($93 million) Series D round from big investors, including new US backers Stripe and Goodwater Capital and existing US-based investor Thrive Capital, as well as existing European backers Passion Capital and Orange Digital Ventures, according to a press release seen by BI Intelligence.
This latest round has more than doubled Monzo’s valuation from $113.6 million to $366 million. Monzo will use the money to expand its team as it rolls out its current account offering.
That major US investors participated in the round looks likely to give Monzo a boost.The predominance of powerful US backers in this round, both new and existing, is likely to benefit the relatively young company by deepening its ties to US VCs, which tend to have more money at their disposal than their European counterparts. Also, backing from these US firms could make it easier for Monzo to expand into the US market if it ever chooses to do so: Monzo also revealed that its user numbers have jumped circa 300% since February, so it may look to branch out into more markets going forward.
Although this is a big win for Monzo, the UK neobank market is fiercely competitive.That Monzo has raised this significant amount from such influential names is likely to give the company a powerful boost, and indicates that some of the world’s biggest VC firms see promise in its business strategy.
However, this latest development doesn’t yet guarantee that Monzo will come out on top. It’s worth remembering that Monzo has so far raised less money than UK rival Atom Bank, and has fewer customers than German competitor N26, which is planning to enter the UK market. So while the ability to attract big-name investors is undoubtedly a positive, the neobank that grabs the biggest share of this crowded market will likely be the one that manages to differentiate its offerings most effectively.
BI Intelligence, Business Insider’s premium research service, has compiled a detailed report on digital-only challenger banks that:
- Looks at the different business models neobanks are adopting to compete with incumbents.
- Gives an overview of the neobank scene in different geographies.
- Explains the biggest obstacles neobanks still face, and how they can navigate them.
- Examines the opportunity big banks have to win the race to digital.
- Discusses what the banking scene of the future will look like, and who might come out on top.