Monzo: investment, profit, VCs and crowdfunding


No they sold it off at an inflated price for a quick profit. Then :arrow_lower_right:

(Josh Lindl) #22

Going against my own point to move on…

You have a fair point that debt is important. But your problem/Maplin’s is/was debt. Monzo has no debt so I don’t think your point is relevant here.

Our conversation originated on the marginal profitability of a new-to-market product within a scale-up FinTech, not debt at an established highstreet hardware retailer brand. Apples and oranges. On product, Maplin could have had a product that sold for 100% margin (very much doubt it did) but saddled with huge debt would still fail.


True, 2 completely different businesses. Just trying to highlight that at some point people will want to extract some money from the business. And if it is hollow that is the point it goes pop.
We can leave it here though as we’ve gone a long way off topic.

(Jordan) #24

I don’t want to keep the thread off-topic and it might be best if someone from the Coral Crew makes a new thread ( @Peter_G maybe you could help).

But the people who want to make money (or extract money) off of what they’ve invested will be able to do so in two ways (this assumes an IPO):

  1. Dividends; and/or
  2. Selling their shares.

Monzo if they don’t have the revenue don’t have to pay Dividends and the sale of any shares won’t be back to Monzo they’ll be to someone else.

So I’m still confused as to how Monzo owes this money to anyone and it’ll make them go bust?


At an IPO someone will borrow money to buy monzo. Then they’ll go bust. (Hopefully not)

(Josh Lindl) #26

Who is someone? If they want to buy Monzo at IPO they are gunna need 2-10bn and it will have to agreed with the regulator and go through a lot of due process and due diligence. Again, a regulated bank is different to a shop that sells…techy tat(?)…i mean i honestly dont really know what it sold.

(Simon B) #27

I’ve said this before but “losing money” is a really a misnomer in the way that most people use it. It implies we’re doing something wrong or that we’re not in control.

What’s actually happening is that we’re spending the money that’s been invested in us to follow various paths that lead towards being a profitable company. People (both VCs and crowdfunders) have continued to invest in us because they can visibility see that progress being made :grinning:

(Dan) #28

:point_up_2:t2: this.

It isn’t “losing money”. The money that’s being used was deliberately raised to help with the operations of the business until profitable. It’s entirely expected.

As long as there’s demand for investment (from VC’s + the crowd), it shows the money is being spent in the right way. i.e, the business is successfully achieving what it’s set out to do.

Monzo has been oversubscribed in every round, so it’s a good sign!

(Jordan) #29

This is exactly what I’ve been trying to articulate - you acquired the money by effectively “selling” part of the business - there is no “owing” of that money back - Monzo should and can and are spending that money how they want to develop the business.

There will never be a point where an investor can go to Monzo and say “I want my money back” because that isn’t how investing in companies (let alone private start-up/fin-techs) works!


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(If there's the wrong end of a stick, you'll find me holding it.) #31

Bit harsh, maybe?

(Michael) #32

Given how long you have been a member of the forum, that is quite some achievement! It’s probably not the daftest I have read in the last week or so, let alone a year


Of course it’s expected up until now, but at this point monzo want to solidify and start turning a profit, hence looking for revenue streams. But to turn a profit they need revenue streams that are profitable or at least that will become profitable.

(Alex Sherwood) #34

And they have them - overdrafts & loans both earn Monzo more money than the cost that they paid to acquire the average user who borrows from them.

Now they’re adding additional revenue streams like energy supplier switching & Monzo Plus which will both be profitable on a per customer basis.


What do they include in customer operations? Is that all their running costs?
Is this annual or monthly?


A bit worrying that overdraft is their biggest earner. Especially as the way they charge is about to be banned so in all likelihood this will dramatically decrease unless they set a very high interest rate.
I’m quite surprised they earn that monthly from overdrafts, that would mean that half of customers are always overdrawn.

(Alex Sherwood) #38

They chose the current pricing structure because it made it easier for users to manage their overdrafts so if anything, I expect their revenue from overdrafts to increase after they introduce their new pricing. Even though that won’t be the intention.


Have you done the maths on that? I think best case £1000 overdrawn 50p a day works out over 18%
£100 overdrawn 50p a day works out 182.5%
How would they be able to charge more on a flat percentage?


These are the costs for a single customer per year. So, on average, each Monzo customer spends 14 days in their overdraft (less than 4% of the year).

(the image is from this part of this Monzo Open Office:

(Alex Sherwood) #41

The average person borrows £700 when they use an overdraft so the 182.5% figure is not realistic :slight_smile: