LONDON - UK digital bank Monzo is in advanced discussions with Alphabet (NASDAQ:GOOGL)'s investment arm, Capital G, for a major fundraising round that may propel the company's valuation beyond the £4 billion mark. This potential influx of capital follows a period of significant growth for the new bank, which has seen its user base nearly double to 8.5 million customers and is on the cusp of turning a profit.
Monzo's last funding round occurred in late 2021, raising $500 million and elevating the bank's valuation from a pandemic low of £1.1 billion to $4.5 billion by the end of that year. Since then, Monzo has focused on expanding its reach and enhancing profitability. The current year has been pivotal for the digital bank, with customer numbers exceeding eight million. The company has also hired former Cash App executive Conor Walsh to spearhead its expansion into the lucrative US market.
The bank has not only grown in terms of customer base but also explored strategic moves to broaden its influence across Europe. It assessed a merger with Nordic financial institution Luna, which would have marked a significant step in Monzo’s European market penetration.
If successful, the new investment led by Capital G could conclude within this year, marking an end to a two-year fundraising hiatus for Monzo. The talks come at a time when Monzo is nearing profitability within Alphabet's expansive $1.7 trillion technology ecosystem.
The negotiations in late October 2023 suggested a possible £3000 million fundraising at a £3.5 billion valuation. This latest development indicates that the final figures could be even higher, reflecting confidence in Monzo's business model and growth trajectory.
This strategic move by Capital G to potentially lead the investment underscores the growing interest in fintech solutions and digital banking platforms that have disrupted traditional banking services by offering user-friendly, tech-driven financial services.
As Monzo gears up for this new chapter, it stands at the forefront of a rapidly evolving fintech landscape, with a potential valuation that reaffirms its status as one of the leading neobanks in the UK.
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