Monzo in talks for £300m fundraiser placing £3 billion valuation on the bank

Monzo, one of the UK’s most prominent digital banks, is in talks to raise hundreds of millions of pounds at a sharply higher valuation despite a string of recent setbacks, including curtailing its expansion in the US.

It is in discussions with investors about raising at least £300 million in new funding. Approximately £200 million is expected to be provided by new shareholders, the remainder from existing backers, according to reports.

Monzo was founded in 2015 and has grown rapidly, signing up five million customers, but has struggled to build lending and other means of creating revenue. It aims to make a profit next year, having lost £130 million last year.

The new fundraising would put a £3 billion valuation on the bank — reflecting substantial growth in Monzo’s revenues, according to one source close to the process, and almost three times the £1.1 billion valuation achieved in its last capital-raising earlier this year.

Monzo withdrew its application for a full US banking licence three weeks ago when it is understood it was made clear by American authorities that its application was unlikely to succeed.

In recent months it has launched a service enabling customers to make card payments in instalments, in an attempt to gatecrash the “buy now, pay later” revolution.

FT Partners, a US advisory firm, is working with Monzo on the funding round. The bank declined to comment.

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