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Monzo set to launch £20mln crowdfunding after reaching 'unicorn' status

Published: 22:38 30 Nov 2018 AEDT

Monzo
Monzo has about 1.2mln current account customers

Challenger bank Monzo is set to launch a crowdfunding on Monday to raise £20mln after last month reaching “unicorn” status, a term used to describe a privately-held start-up company valued at more than US$1bn.

The tech start-up, known for its bright orange debit cards and smartphone app that lists purchases, became a unicorn after raising £85mln through venture capital investors Accel Partners and General Catalyst.

READ: Monzo becomes latest UK tech start-up to pass 'unicorn' milestone after raising £85mln

The group also secured £71mln in an equity raise from Goodwater Capital in November last year.

The crowdfunding will begin at 10am on Monday for existing investors while customers can take part from 10am on Wednesday.

Monzo customers can invest up to £2,000 by using the banking app. Crowdfunding investment platform Crowdcube will then email the details of their investments within a few weeks.

Monzo said its shares are now worth £7.7145, up from £2.3566 at the time of the last funding round.

The funds from the crowdfunding will be used to help Monzo invest in its technology, including upgrades to its smartphone app. The app recently introduced a new feature that allows users to block gambling transactions.

The company started in March 2016 through the launch of its Mondo public beta app after raising £1mln in its first crowdfunding round. Four months later, the firm changed its name to Monzo at the suggestion of customers.

In April last year, the Financial Conduct Authority gave Monzo a full UK banking licence and the company raised £12mln in another crowdfunding, beating its £2.5mln target.

The bank finished rolling customers over to UK current accounts in April this year. It now has about 1.2mln current account customers.

Monzo is popular among millennials who use the app because it allows them to see purchases instantly and provides an outlook of monthly spending. Monzo also offers free overseas cash withdrawals on up to £200 and free-point of sale for international purchases online and at stores, restaurants, hotel and other businesses.  

Tech start-ups like Monzo have proven to be a threat to foreign exchange businesses and traditional high street banks, which have been trying to play catch up by overhauling their digital services and improving their customer offerings.

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