UK-based start-up bank Monzo has received a further £22m ($27.4m) funding from investors. It isn’t the only new UK bank to receive generous amounts of funding in recent years.
Monzo, which crowdfunded £1m in 96 seconds last year, has raised £19.5m from Thrive Capital, Passion Capital and Orange Digital Ventures. It has also reserved a further £2.5m for equity crowdfunding on Crowdcube. This has led to a valuation of £65m, following its estimated value of £24m in 2016.
Speaking to RBI, CEO of Monzo Tom Blomfield said: “The investment is an important step towards launching current accounts, which will happen in the next few months.”
There is a large amount of money being thrown at new age banks attempting to seize a sizable chunk of the market. Monzo alone wants to ‘become the financial control centre for a billion people’.
However, it does not have current accounts yet. This, despite over 100,000 people opening an account (according to the bank). Billed as a trial at the time, 60% of them are currently active, and over £100m has been spent using Monzo’s cards.
Another start-up, Tandem Bank, received funding from a slightly trendier source in January as it acquired £35m from UK retailer House of Fraser. This followed venture capitalists handing over £22m, as well as starting its own crowdfunding campaign which reached £1m. Still in beta, it plans on launching accounts this year.
In January 2016, Starling Bank received $70m in investment from Harold McPike, the founder of Bahamas-based quantitative investment manager QuantRes. Since then, it has been very quiet and not received to receive any further funds.
Atom Bank, which launched last year, benefitted from BBVA acquiring a 29.5% stake in the bank for £45m. It offers two fixed saver accounts and SME lending with plans to offer current accounts with five million by 2020 being their target.
It is also rumoured to be receiving investment from worldwide musical superstar Will.I.Am to the sum of over £4m. This may be a masterstroke to attract younger consumers, but Will.I.Am has also designed a car that costs $900,000 and looks terrible (see below). So we’ll need to see with that one.
The real question is, is this money going to keep coming in? Everybody wants to see a new challenger take the British banking market by storm. However, investors need to start seeing results. Despite large wads of cash thrown at start-ups, very few have actually officially launched with most still in, successful or otherwise, trial stages.
It remains to be seen if the patient investor remains patient for much longer.