If their shareholding was in double digits I could understand but when it is in a tiny fraction of a per mille ( o/oo ) it is laughable
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It’s hardly laughable.
Compared to the original investment, it is double digits.
There has been somewhere around 33% dilution.
Whether you have £1 invested or £1m, it’s a fair piece of your investment you may want to recoup.
If the company is worth £100b one day, the difference could be in the millions.
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But what are you trying to ‘recoup’? You still have the same number of shares, and their value has gone up. That’s what it’s like having shares in a company, regardless of dilution issues – you have a certain number of shares and their value goes up and down depending on the market. Isn’t part of the ‘market’ for a startup the need for investment rounds and capital (i.e. it’s not as straightforward as a listed company)? This is what I’m struggling to understand – what has been lost just because the shares don’t represent the same percentage of ownership, given that their value has increased (significantly)?
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There’s a huge difference between having a particular amount of shares, which can gain a flat amount of value each.
Or having a particular percentage of a company, which proportionally grows with the company.
As the company grows, the share price will increase, sure. But they will grow exponentially as a percent, vs a flat value.
Keeping your original percentage of the company will mean your holding is worth more, if the company grows…
Not reinventing the wheel here…
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Not to nitpick, but either way, the value you hold will grow linearly – it’s just that with a higher percentage the linear multiple is higher. But get that with a larger percentage of the company, you benefit more from growth. But you’ve also had to invest more, so you’re not getting anything extra.
What I still don’t understand, though, is the desire to hold on to a particular percentage ownership. Surely the issue is how much money (or how many shares) you want to invest? For instance, if you invested £500 in the first round, and then £500 in the second round, you’d end up with the exact same number of shares (and percentage ownership) as investing £1,000 in the first round. In the first case, you’ve ‘maintained’ your original percentage ownership, in the second case it’s been ‘diluted’. But from what I understand 
, you’d have a higher value investing £1,000 in the first round, so better off investing all you can initially and not worrying about dilution.
So I don’t understand where the percentage ownership comes in. Isn’t is just an issue of how much you want to invest? If it cost £10,000 this round to maintain a .0033% ownership, would it still be worth it, even if the original £1k investment was now worth £1.9k? Or would you still invest just £1,000 this round? Isn’t the overall decision, “how much capital do I want invested in this company” (though obviously limited by the £1k max for Crowdcube), not, “what percentage of the company do I want to own”?
Where’d you get that number from?
Wrong. Money invested earlier will grow more than money invested later. Your later investment is a completely separate, and you should evaluate each subsequent investment on its own merits. There’s a handy spreadsheet in an earlier comment if you don’t believe me - you can see in black and white that they operate completely independently. The key is that when you buy stock in each successive round it gets more and more expensive to do so. Additionally, going further along this train of thought, imagine in some hypothetical future Monzo was valued at £1.2Bn and they took on £300m in investment, which is far from unthinkable. Well, you’d have to cough up about £10k in order to be “Keeping your original percentage”. Just sayin’.
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The point of a startup, and the unreasonable amount of investment that a successful one receives, is that the growth is non-linear. So I’d disagree. But it’t not like the original Crowdcube investment happened when the company was worth £10k…
There is no reason to try and keep a particular percentage when that percentage is, essentially, a rounding error. You should evaluate each round on its own merits.
If you invest £500 in a later round you will get fewer shares because shares are more expensive. However your last assertion is correct; you would have more equity by investing in an earlier round.
It doesn’t; it is bogus; ignore it.
Yes, exactly. And you should maintain a diversified portfolio. Don’t shove it all into one place. Monzo might fail. Or have a “down round”. Eggs, baskets, etc.
What would be a pretty brutal round! And exactly, under some extreme circumstances you would say “no, thanks”.
Also “given the valuation in this round, and the potential upside, is it worth me putting money in”. Each round on its own merit. And yes, you are right.
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I read it in an related topic. I also read that this round is 25%.
I don’t contest that. So not sure why you think I’m wrong?
My argument is that comparing a fixed amount of shares to a percentage of a company is apples and oranges. And it’s obvious why there’s a difference.
Yes, it’s somewhat apples and oranges. But let’s break down what you said:
Here is the problem. You assert that by buying shares in a round and then not buying shares in subsequent rounds you can only expect a “flat” yield. That’s not true. Assuming the company’s value grows exponentially, so will the original shares’ value.
Yes, absolutely. The issue I have is not that if you invest more you will get more, it’s with your assertion that if you don’t keep buying stock in subsequent rounds you will see “flat” yield, which is not true.
Even though there are 2 weeks to register an interest thousands of people will be like https://www.youtube.com/watch?v=ofyhwiWHKV4 on Tuesday 28th 
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Monzo just breached £5m in less than a day. How’s that supply and demand / risk appetite argument working out for you?
[quote=“duncang, post:58, topic:7618”]
“protecting” explicitly ties that second investment to the first. It implies that without the second investment the first will be in some way devalued. That is not true.
[/quote]
I don’t need to look at a spreadsheet to know that if you have 1% of a ten billion dollar company it’s worth more than having 0.5% of a ten billion dollar company. Maybe you don’t think that demonstrates devaluation over time. Before you keel over, I’m talking hypothetical numbers, not Monzo specific.
Yes you can, as I have just done. By purchasing more shares I have maintained my % share of Monzo. It might sound ‘arbitrary’ to you, but ask me when Monzo’s worth 10bn.
So, well over £5m now.
I wonder what measures Monzo has taken to avoid either multiple pre-registration ballot entries by individuals, or huge numbers of ballot entries by automated bots. Although the Monzo app users will have a fair degree of identity knowledge associated with them, the use of CrowdCube looks more open.
Individual multiple entries won’t have too much of an effect on other people, but will increase the naughty user’s chances of gaining a share in the ballot. But if a non-trivial proportion of the overall pledges are related to malicious bots, that would be quite different. There doesn’t seem to be much time on the 14th March to assess which bids are duplicates/bot-sourced, especially last minute pledges. @daniel do you know if CrowdCube have any anti-automation protections in place?
Depending on the bot owner’s intent, these would be classified as either OWASP Automated Threat (OAT):
- OAT-016 Skewing (of the pre-registration pledge metric)
- OAT-021 Denial of Inventory (by removing the opportunity/chance to invest by real other people) - new proposed OAT
Both of these could be going on at the same time. More information on automated threats here:
https://www.owasp.org/index.php/OWASP_Automated_Threats_to_Web_Applications
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I’m new to the investment game. I’ve only ever bought stocks using an app and was wondering.
What gains will I get from investing £200 of my own money? (If I get through the ballot?)
If the company increases over the next year 70%, does that mean my £200 is now worth £340… and when could I cash this money out back into cash? (Whenever I want/When the company becomes limited and trading on the stock market/after x years)
Finally…
What can I now do as an investor of Monzo?
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When you buy shares you buy a percentage of the company, it would help if everyone remember this is an actual purchase and you are parting with your cash! You are exchanging your £200 for a piece of paper that says you own X amount of share of that company. Like any other purchase, that £200 is no longer yours. This is not like an ISA or other savings where money is yours and you earn interest on it.
Depending on share as described in the company’s constitution (and I’m still not 100% sure what shares Monzo are offering, someone here might be able to confirm) you get that proportion of given rights within a company. Usually ordinary shares give you voting rights and dividends.
Voting Rights: Probably insignificant in this case, calculations above in this thread rounded the 0.0033% mark. You will have no sway on the decision making at Monzo.
Dividends: Forget about your initial £200 You are now only getting the percentage of what the company decides to pay its investors. Usually at the AGM of the company they would review year’s profits, decide how much they would want to hold as reserves and how much of the profit they can afford to pay out to investors. You would get your equivalent percentage of that payout.
It could be that Monzo struggle to turn a profit and no dividends are paid out for 10 years, in which case you will see no money at all. The current accounts could be a success and Monzo could make a trillion pound profit the first year, you could get your 0.0033% of a massive amount. No one knows. Anyone that quotes you a return value is lying!!
Edit to add: It could also happen that Monzo make slight profits the first few years but decide not to pay dividends in order to reinvest info further growth (Expansion into other markets?)
Value of share / Re-selling I may be wrong on this one (Actually may be wrong on everything 
I’m no financial expert) but I doubt you could just sell your shares as these are not publicly traded on the stocks. But your shares would also hold an inherent value which at some point in the future Monzo could buy back off you or you could sell to a third party depending on Monzo approval. This percentage ownership also means you would get to receive that percentage of all Monzo assets should the company be dissolved, obviously after paying of creditors and stuff like that.
By buying shares, you literaly buy that, a wee tiny part of the company.
If someone else could correct what I got wrong or clarify Monzo specific info and what I’m unsure about, that would be great 
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I have had this situation with non publicly traded shares on Seedrs. The Nominees did two documents which noted the change of ownership and change of contact details and we exchanged the agreed sum between us. I am not sure if the Nominees had authority to do so or if they had to clear it with the company first
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Your description is more of a public company than a startup. Whether or not Monzo makes a profit over the next couple of years, that amount will be dwarfed by the injections of cash that they will receive from future funding rounds. The idea with a startup is that investors put in very disproportionate amounts of money compared with a traditional business, but the potential global reach has the opportunity to make it worthwhile by returning exponential returns. In the ideal case you would actualise your return by selling the shares after an IPO, after which the company would look more like what you describe. The capital gains are mostly in the value of the stock, not in the dividends.
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Well you conveniently ignored the fact that later users of a product are not as engaged as first adopters, doubly so when it comes to investing hard earned cash in it. But this is all moot - there are EU rules on max crowdfunding amounts, which will keep the ceiling artificially low (at least as long as Britain is in the EU…)
I think that it’s safe to say that your mathematical acumen is beyond reasonable doubt at this point. But here you paid ever increasing amounts to buy shares in future rounds in order to maintain your arbitrary percentage shareholding - which must be subtracted from any imagined profit. But this is a sideshow. The point is about whether it is possible to “protect” your initial shareholding.
This earlier post is directly relevant:
If you were to use that archaic accountant’s tool, the spreadsheet, you could definitely see that the two investments operate totally independently. But I understand you, those numbers can be so complex. Best go with your gut feeling. Financial decisions based on emotional responses and arbitrary percentages are always the most sound.
How rich will you be once they float Monzo? I think it’s going to be a lot less than you imagine ;-).
Let me ask you a question: would you buy more stock than you are currently allowed to? I think it’s clear from your posts that your answer would be a resounding “yes”. So, say you had a bit more money in your account than the £1k - say £10k. You see a great future for Monzo (a “10bn” valuation, no less), so you plough it all in. You’ve increased your stake considerably. Did you “protect” your initial investment in this case? Well, er, no, this has nothing to do with your initial investment, right? You made a completely separate investment, one that was much larger, and one that you paid twice the price per share for. You made two investment decisions at two different times paying two different prices. Your “protection” of your investment is actually one arbitrary point on a line which runs from £0 to £22m; it’s only in your mind that this one point has any significance, and once you expand past that you can see how this is, indeed, a separate investment to be evaluated on its own merits.
If you won’t take it from me then perhaps you’ll take it from @tom - after all, you do seem very keen on ploughing lots of money into the company that he’s running.
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While the EU were looking at placing limits on crowdfunding following concerns from Spain certainly up to a year or two ago I see no sign of any actual Regulation creating such restrictions, only draft guidance, and Germany, Italy, etc all implemented their own domestic regulation, which varied from country to country, had it been to enable EU Regulations it would have been consistent between each jurisdiction within the EU.
I have tried to Google a source to verify your claim but could only find old PDFs dating back to 2014-2015 etc.
Can you provide the name of the Regulation concerned or at least an up to date website from some official body that details any enforcable limits?
EDIT Tried later with Bing instead of Google and got much better results
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I think its up to each individual country rather than EU based regulations -
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My information came from Monzo themselves: from @tristan in this video from last night (link goes to the relevant part): https://www.youtube.com/watch?v=D1PU4XNbF-U&feature=youtu.be&t=15m34s
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