Monzo seeks funding at decreased valuation - Business Insider - Business Insider

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Monzo submitting to a funding round that lowers the value of its business throws into stark relief the challenge that the pandemic has created for neobanks

And because most neobanks are not yet yielding a profit on their own, they are dependent on fresh infusions of capital to remain in business. This means that if investors start becoming unwilling to pump capital into neobanks' businesses, many will face a reality check regarding their sustainability that could result in a contraction in the number of active neobanks in the near future.

If Monzo can get close to breaking even by the next time it looks to raise funds, its valuation will likely head back in the right direction. The fact that Monzo is reportedly still managing to raise tens of millions of pounds in capital even during the coronavirus crisis is a good sign for the neobank, even if its valuation slides.

One way it could move toward the break-even point could be to follow fellow UK neobank Starling's example and make an aggressive play to support businesses during the coronavirus crisis. Monzo its business offering in March — by applying to be a lender through UK relief loans schemes like Starling did, for example, it could boost business customer acquisition during the crisis by supporting embattled small businesses.Business Insider Intelligence analyzes the banking industry and provides in-depth analyst reports, proprietary forecasts, customizable charts, and more.

 

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