Earnings from card transactions and funding round

With the terrible situation going on with COVID 19 at the moment and people staying in, I am wondering how much this will effect Monzos revenues considering that the majority of the turnover last year was from earning a small transaction fee every time Someone pays using Monzo - also will this sudden drop in revenue worry/scare off investors who are involved in the latest funding round ?

This is being discussed over here Monzo and the Coronavirus :slight_smile:

Though I don’t think it’s gotten onto the topic of investor concerns specifically yet.

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Until now they’ve done very well to seek out extremely knowledgeable, long-term minded investors with very deep pockets.

It’s not yet confirmed who the prospective investors are for the next round, and to answer the question we first need to know who they are.

if it is any previous investor eg. Y Combinator, General Catalyst, the Collison brothers or any of the rest, you can be sure they are not going to be running for the hills because coronavirus made the very short term outlook cloudy for everyone. They have money to put somewhere and are betting on Monzo’s long term vision, which isn’t affected by a 0.5% drop in interest rates or several months of low activity from an isolating UK population.

If it is Softbank (as rumoured in a tabloid) then you can probably flip a coin as to what they are thinking or will do, because they are a total loose cannon.

Whoever it is, I’d think that any shrewd investor would be trying to bargain for a lower valuation right now, because it’s suddenly become a buyer’s market and equity prices have popped across the globe. Monzo would probably have been hoping for a £5-7bn valuation earlier this year, however with world events and markets crashing you can be sure that investors are trying to knock it back to £2-4bn. This is probably why the round is taking a long time and Monzo are announcing measures to cut cash burn.

TLDR: what investors are thinking depends on who the investors are.

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OK so nearly 2 weeks on and we have the following situation

  1. Main revenue source Eg card transaction fees - reduced drastically- with a further 3 week isolation order about to be given PLUS Monzo plus possibly shelved for rest of year or until the travel insurance policy can be clarified hitting revenue further

  2. Offices being closed - staff furloughed - CEO taking no pay for 12 months (fair play to Tom - aa long as it’s not because they have made an expensive mess of the risky push in to the USA When they had not mastered the UK yet ? )

  3. No news on the new funding round situation - which has been mentioned in the news since Novembee last year - plus SoftBank most likely ruled out as an investor now they have issued a $16.7 billion loss

This all says to me - cash crunch - hope I am wrong.

However, if the BOE starts a new stress testing exercise on UK banks like they did during the financial crisis I am presuming Monzo will be included and If so will Monzo pass if the new funds don’t get issued ?

Worrying times for a lot of people and businesses and I am guessing new funding round will give an indication on how appealing Monzo’s business is in the new world we find ourselves in.

Ramifications of which will be with us for at least 18-24 months - or at least until a vaccine is released.

Fingers crossed Monzo will pull off the funding round as planned and my fears are proven wrong

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Is there any clarity on what this is?

I’m curious as to how exactly the current efforts to get off the ground in the US are an expensive mess. I mean, they seem to be taking a more measured approach than Revolut, where some kind of “false start” meant that I managed to sign up right when they first launched, got my card, then had my card disabled a couple years after, and only a couple months ago when they launched “for real” in the US was I able to get another one.

They are betting that Monzo might “build a financial control centre for a billion people” :cowboy_hat_face:


Speculation. They could just as easily be pushing for net profitability without needing a funding round. All we know for sure is that the economy has gone off a cliff and Monzo are now being very frugal and cautious with their tens of millions of pounds in cash.

Yes, I recall this being the original vision. I’m sensing the vision has, with 20/20 hindsight, been brought into focus and is now something else that I can’t see?

ok half a billion in these frugal times :slight_smile:


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