Announcing Our £22m Investment Round and Crowdfunding!

If you look at the scatter graph @alexs posted above you’ll notice that most investors are only investing tiny amounts anyway. Most of the people who set their alarms and furious clicked on the invest button in those 96 seconds only wanted a £10-100 investment. That seems more like wanting to be a part of something than an investment. If Monzo want to spread virally they need everyone to be spam bots and by investing you automatically become one! :slight_smile:

I am literally a Monzo spam machine on social media and with friends and family because I invested last time, and I seem to find myself subconsciously ridiculing Atom’s terrible UX and Starling/Tandem’s lack of product. If everyone can get some Monzo shares then that would mean tens of thousands of spam bots like me and it would grow like bacteria.

5 Likes

I can’t decide if it’s worth investing again.

If I invested x amount in the first round of funding, how do I know what’s it’s worth now?

Tom has explained the calculation here -

3 Likes

Hey Mattdell,

Monzo was valued at £30m after the first crowd funding, now it is valued at £65 million. So a £1,000 investment is now worth £2,166. A very good return for 1 year.

It is worth a bit less than that due to the dilution to existing holders from the interim funding round. About £1960

6 Likes

The (mean) average investment in the first round was £537 so it seems the image is a bit misleading. Essentially the fact that the points at the bottom are scattered between £0 and £100 makes it seem like it’s bigger than the big solid line at £1,000. In reality there are likely more points above the £500 halfway mark than below it, just with less dispersal.

I totally agree this could turn out with a lot of people upset at again being denied a stake in “their bank” - I was lucky enough - or quick enough, to have invested the full £1000 pounds in the previous round , which has, on paper made a very good “return” so far.

Am I being greedy wanting another “guaranteed” £1000 investment to keep my initial luck of being quick enough going or should we be “giving” others that weren’t even customers / quick enough / lucky enough back then the chance to be Monzonaut promoters to all their friends.

Being an investor in Monzo, an app I love and believe has a great future makes me an ambassador for the product and I will try and introduce as many people as I can to it. The more people I introduce, the bigger and better Monzo gets and consequently the more my investment goes up - hopefully.

To guarantee original investors rights to re invest seems to be limiting the advertising potential of this crowdfunding round - I would be perfectly happy to limit all investors to £250 this time , increasing my stake but giving at least 10,000 others more chance of investing in “their bank”

Yep, Im probably greedy, I will be happy to invest all that I can , but wouldn’t be unhappy to be limited if all were.

2 Likes

If you initially invested £1000, and on this raise invested £250, your stake re the March 2016 raise will have actually dropped. This is because of dilution.

Check out Tom’s message for the numbers.

2 Likes

@anon95680666 following on from Dan’s post, I wouldn’t expect any existing investors to take a hit in order to enable others to invest.

But once the existing investors have had a chance to preserve their shareholding, I would prefer it if Monzo took the approach that Rarther’s suggested for the remaining shares -

3 Likes

I know, my initial shares have been diluted by roughly 25% at £87m post money valuation in this round, so instead of owning .00033(?) I now own 0.0002475 of a bigger pie without further investment, as I said I would far rather have more monzonauts invested beavering away to make my bit of the pie that much bigger :slight_smile: by being invested in Monzo and “selling” the product to all their friends.

edit
Alex I don’t count it as “taking a hit” - I see it as getting more people invested in a great product with a much bigger IPO valuation because of greater uptake because they have convinced their 10 friends to join who then convince their 10 friends to join :slight_smile:

3 Likes

I am very happy with the approach that Monzo is taking to this round. Existing investors as part owners of the company should be given priority and the opportunity to maintain their positions. Hopefully more investors will still be able to get on board and become ambassadors - and perhaps in the event of huge demand more shares could be made available to them.

According to @tom it’s 0.00023 (note that his example is 10x different to yours, so presumably you invested £100 rather than the £1000 in his example, but the digits will be the same). I assume that the difference was due to dilution in the extra round of funding from Passion Capital between then and now. Probably?

It was a rough calculation :slight_smile: - the .00033 crowd fund 2nd round was roughly diluted by 11% at roughly 5m to give a post money of 45m giving a diluted stake of roughly .0002937 ish :slight_smile: in the 3rd round- then this 4th round funding of 22m post money valuation of 87m giving roughly a dilution of 25% giving a diluted stake of .00022 - admittedly I had forgotten the 5m 3rd round funding - forgot to look at my spreadsheet :frowning:

1 Like

Selfishly glad to have the opportunity to increase my stake from last year.

Yeah, I have just been running the numbers too. I was finding it hard to square the increase in value of the shares (2x) with the cost to maintain your share holding (about 90% of the original). That seemed high. My numbers are (for round 3):

£50m post-money valuation
£4.8m cash injection
= 9.6% of company for that cash injection

If you dilute the original 0.0033 by this, you get 0.0029832. This is the new percentage ownership for the crowdfunded people (assuming £1k). If you then dilute that by the 25% dilution this round (25.287536) you end up with 0.02228828, i.e. 0.223 which is what @tom quotes here.

So, yeah, the answer to “why does it take 90% of the original investment to compensate for a 25% dilution, even though the shares now at 2x what you paid?” is “dilution in the interim round”.

1 Like

As an original investor - my shares have doubled in value in one year - but I have to add almost the same investment again to keep the same shareholding? Is that not halving the value of the shares I own as I’ve paid for them twice?

Gah. Where’s the “Investing for Dummies” when you need it?

Will there be further dilution?

1 Like

My understanding is that their value is the same, it’s just the % of the company they represent that changes.
I’m very possibly wrong on this though.

1 Like

You’re right there.
The actual value and it’s percentage of the company aren’t related. They can affect each other but not always.

1 Like

Finance is hard. No wonder people get mugged off all the time.

2 Likes

There are two factors at play that make you need to pay more. One is that, as you say, your shares have doubled in value. If you want to buy shares in the company now, it will cost you more. The other factor is outlined above - you have been diluted by the extra round with passion capital. Therefore, if you want to get your shareholding back to where it was, then you have to pay quite a lot more to counteract both factors at once. Bear in mind that you were diluted at a lower valuation, which is also a factor.

Will there be further dilution? Absolutely - c.f. every document Monzo has sent you about investing in it. But the question you should ask is: is dilution a bad thing? No. It’s a great thing! Why? Now you own a smaller part of a bigger pie (think about it: your shares now own a company that had an extra 22 million quid in the bank). And that extra capital in that larger pie is cash, which can be employed to make the pie even bigger. And that further increase in the size of the pie makes your original shares more valuable - that’s all upside for you! It wouldn’t be possible to grow the company like this without dilution. Nobody loans a startup tens of millions of pounds. It has to be done through issuing more stock.

Don’t think about this as trying to maintain your shareholding; it’s a fallacy to think that is useful. Instead, as is suggested by Monzo, evaluate this as a totally separate deal, on its own merits (do you think the price per share is worth it? Do you think that there is still enough growth potential given future dilutions, brexit risk, etc?). At the end of the day investing in either round isn’t going to make you rich quick (or slow :wink:). If you already have a shareholding you’re probably better spending your time proselytising about Monzo to others and helping them with your feedback in the forums etc :slight_smile:.

11 Likes