Flotation Frippery or Share Skullduggery?

(Edward) #21

Immediately sell shares to the value of my initial investments + interest since that date. The rest is now ‘free money’ (less opportunity cost), so holding longer term has a much reduced risk.


Personally, I agree with your general point about disruption but don’t necessarily agree that Monzo are disrupting the industry or that banking is the same as your examples.

Hailing a taxi or booking an apartment isn’t as deeply embedded as banks and money in peoples’ lives. Natural churn is below 3% in U.K. market, with the incumbents still taking a large portion of that churn. In my view, Monzo is just the bank that the big 6 wish they could build. The software is great but that’s all it is. Software. Once you get into it, many of its features aren’t groundbreaking for a large portion of people. To me, disruption suggests you create a market and monopolies it. Monzo, by its own admission, is a digital bank. They have overdraft charges, a plastic card and lists of transactions like everybody else.

I take the challenge, I just can’t subsribe to the philosophy. I hope I’m wrong, though!

(Josh Lindl) #23

I hear you but a couple of your points might contradict each other:

  1. I agree the big 6 are very well embedded. If, by your definition, disruption is monopolising, then I’d ask you if you could really expect Monzo to have monopolised banking within 3/4 years of start-up? That’s wholly unrealistic. At the first raise Monzo were around 30 people strong and have since speedily hired to around 500 (I believe) now. So let’s say average of 250 people per year working this since they started 3/4 years ago. I know projects inside banks working at that sort of scale that have achieved the square root of nothing. It was just roughly a year ago that Monzo had 400,000 pre-paid users. They now have 1.5 million current account users. That’s massive! Keep up that pace (in all reality speed up with more staff) then they’ll move towards your definition of disruption. ~0% of people had their salary paid in this time last year. Now it’s 30% plus and on a steady upwards trajectory.

  2. Money is embedded into people’s lives. I only see this as a good thing for Monzo. That’s why the opportunity is so large here. They want to be the centre of your financial life. Given finance is so embedded in your life they effectively become the centre of your life (a bit of a stretch to demonstrate my point). If (rather when, IMO) they achieve this they’ll have deep and meaningful customer relationships. That’s the basis for a whole load of sub-business out the back of the platform.

Separately, “it’s just software”. I’m not sure I follow this. All apps are software. Whatsapp sold for 13bn. Facebook is “just software”. In my view all companies will effectively be software companies in the future - it’s impossible to escape. Monzo are in there early and will continue to develop their offering whilst big banks just can’t move at the same speed.

Lastly, sorry to bang on(!) - “natural churn is below 3%” - the past isn’t always indicative of the future. Expect this number to grow as Open Banking becomes more embedded.

(Colin Robinson) #24

Bit more:

(Jordan) #25

I think we will likely see another Crowdfund before we see an IPO.

My estimate is:

Next 2-3 years = Crowdfund
In the next 6-8 years = IPO

Not really founded on anything just my guess really.


I don’t think they would crowdfund again, not sure why they’d bother?

The only reason the crowdfunded in December was because of the amount of people who missed out at the previous round (gone in 90 seconds…)

I get the impression it’s too much work, time, money when VC’s will simply hand them the cash especially given they now have 30k who recently bought shares

Who knows though :man_shrugging:

(Jordan) #27

I just think it keeps the community invested (quite literally) - they know they can do it so i don’t see why they wouldn’t? Granted they could just set up some more investors but i just think they’ll do another round as a “last hurrah”.


Yeah I get that but having just had 30k+ investing where do they draw the line?

It’d be great if they did don’t get me wrong!

(#savetheseabass) #29

They have to justify the crowdfunding, they can’t just do it for giggles. The next raise will probably be for international expansion


I agree

Think I said that a few posts up

Brewdog have done something similar

(Sean) #31

They went to the effort of bringing it in app so I would guess that they anticipate the possibility of a future crowdfund but anything could change.

(Jordan) #32

I’m not saying continuously crowdfund - but one last one before floating I could see happening - they didn’t need to do the last one as could’ve easily made the £20 mill from the investors.


But I think Monzo’s reasoning was that lots of people missed out from the previous round

With 30k+ not sure they can say that now?

(#savetheseabass) #34

Also it’s 20million worth of shares split between many people rather than concentrated between a couple of VCs. Important in the context of overall control

(Jordan) #35

30,000 out of 1.5million - that’s still only a small percentage.

I definitely see why they probably wouldn’t bother - I just think that they’ll likely try and secure some more funding for international expansion and run a crowdfund alongside - again no basis just my thoughts.

(Jordan) #36

I think the investors still agreed to the crowdfund - seeing as they secured funding first. I think I read it somewhere but could be completely off!


This I can see :+1::+1:


www.forbes.com/sites/oliversmith/2018/10/31/with-a-fresh-billion-dollar-valuation-monzo-is-already-planning-a-2019-funding-round-to-enter-the-us/amp/ :+1:

(Edward) #39

Same reasons they bothered for every round barring (maybe) the first. The amount they have raised from crowd investors is miniscule compared to institutional investors, and they clearly have no difficulty attracting them. The most recent round could have gone from £85mn VC and £20mn crowd to £105mn VC and £0 crowd, and Monzo would have been financially better off (no crowdfunding overheard). They continue to crowdfunding to engender a sense of ownership from their customers, and that seems likely to continue as long as customer growth continues to increase. Expect crowdfunding timetables to align to ‘number of users who have not had the opportunity to invest’ more than it does to institutional funding needs.


Interesting Forbes article from October, Tom said if they IPO at £2billion they’d be sad

I reckon they need to IPO ASAP for creditability both for USA and to convince people they are a serious and stable bank, then more people would pay in their salaries.
So I reckon

  1. Crowdfund Dec
  2. IPO in March 2019 ???