British online bank Monzo doubles valuation to US$2.5b

[LONDON] Online-only bank Monzo has closed a new funding round doubling the startup's valuation to more than US$2.5 billion, making it one of the UK's most highly valued fintech companies.

Monzo last raised funding late last year at a valuation of US$1.25 billion. In this new round, the company will bring in 113 million pounds (SUS$193.6 million) of fresh capital, according to a statement Tuesday.

Among the UK's clutch of fintech companies, Monzo's new valuation puts it squarely in the upper echelons, just behind a pair of SoftBank Group Corp.-backed startups that raised money this year. In May, SoftBank's Vision Fund bet US$800 million on financing company Greensill, valuing it at about US$3.5 billion, while a February investment in OakNorth valued the company at a reported US$2.8 billion.

Even with the uncertainty surrounding Brexit, and the possibility of a shifting landscape for financial firms, UK fintech companies continued to lead Europe in terms funding, taking in US$645 million in the first quarter of this year, according to a recent report from CB Insights.

Monzo currently has over 2 million users in the UK, according to the company. It's part of the growing universe of so-called "challenger banks," a group that also includes Starling Bank and Revolut Ltd. in Europe and Chime in the US

Monzo said this month it's starting to expand into the US -- an expensive endeavor both in terms of setting up local offices and winning customers away from already established competitors. American rival Chime, for example, now has 4 million users and said it has recently been signing up 200,000 or more per month. An additional complicating factor for Monzo's international expansion will be country-by-country variations in regulations.

The new funding round was led by Y Combinator Continuity, the growth fund managed by startup accelerator Y Combinator. Other investors include Latitude Venture Partners, General Catalyst and Stripe Inc.

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