Monzo bank seeks a new round of funding. That would value the business at £1.25bn. This would mean a 40% drop from its most recent valuation of £2bn last year.
The digital challenger is looking to raise around £70-80mln to strengthen its balance sheet in a round which is expected to close in the next month as FT reported.
Read also: Monzo hires veteran Dave Laramy as new VP and head of global financial crime
According to the FT, the majority of the funding will come from existing shareholders such as Accel, Y Combinator Continuity, Goodwater Capital, and Passion Capital rather than new investors.
“It’s not ideal but it’s also not surprising — nobody is paying silly money in this climate,” one VC told Sifted, indicating that Covid-19 will force most private consumer fintechs to adjust their valuations.
The VC also added that Monzo had perhaps been overly optimistic with its £2bn price-tag last year.
In April Monzo’s founder and CEO Tom Blomfield decided to give up his salary for the next 12 months as top executives willingly took pay cuts to ensure that their staff still received their salaries.
Read also: Monzo’s CEO won’t take his salary for 12 months
However, Monzo has also had to furlough 295 members of staff and it has shut down its Las Vegas customer support center.
But the US expansion is still on for Monzo since it has recently applied for the US banking license as the customer support jobs will be likely just moved to Europe and handled by the night shift.
Monzo today has over 4 million UK customers, it raised over £300m in funding to date and was the banking company that received most net switches (new customers minus lost customers) in Q4/2019.
