Monzo Valuation

Did I read somewhere in the press run-up to the American news that Monzo had received extra investment to fund the expansion? If so, is there a more recent company valuation than the last crowdfunding round, and an up-to-date share price?

Technically the valuation is the roughly one billion at last crowdfunding but it is a poorly kept secret that a new round is underway at around $2bn with YCombinator as the main VC. On saying that, Monzo grew by 250k in the past month which will have moved the dial again. Whoop.

It would be hard to say exactly

But likely increased

I’m fairly, not very positive, that Monzo are valued at 100 trillion dollars.

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:joy:

The Y Combinator funding valued Monzo at £2bn, up from £1bn in the previous round. Supposedly Y Combinator invested £100m which implies an almost double of share price from the previous round (£1.9bn pre-money).

I don’t think this holds true. Monzo are valued on their projected growth, not their current user numbers. I think they have likely exceeded projected growth and that has potentially moved the dial a little but without knowing what sort of numbers they showed investors it’s hard to compare.

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Monzo’s trajectory will to some extent will depend on the USA now.

If the US flops (there’s a good chance of this, just because the US market is so difficult) expect the value to move back towards £1bn (although further success in the UK could see it creep back towards £2bn).

If the US goes as well as the UK (difficult to imagine but there’s a fair chance) then expect to start seeing valuations above £10bn and an IPO.

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My sense is of a momentary pull-back in the share value, due to the increased level of risk of launching in the US, and associated investment levels. However, if it works out - and I don’t think this is by any means certain - it will pay off handsomely.

Not quite how it works

Double a companies value doesnt double the share price

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He wrote “almost” that you intentionally left out. I guess his almost accounts for dilution, so he is right.

I thought the almost refered to the 1.9 that was earlier in the setence instead of 2

I was saying that the company is £2bn post-money and £1.9bn pre-money (£100m investment), so surely the share price is the uplift from £1bn to £1.9bn, hence the almost double?

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I was saying that the company is £2bn post-money and £1.9bn pre-money (£100m investment), so surely the share price is the uplift from £1bn to £1.9bn, hence the almost double?

This is only true if no new shares were issued. It’s highly likely (almost certain) that new shares were issued, meaning that each existing investor was diluted to some extent. The percentage of the shares that you own has decreased significantly since you originally invested. The share price is likely to have increased following the investment, but the percentage increase is not directly proportionate to the valuation increase. Unless we know how many shares are in circulation, we won’t know the share price until Monzo tell us.

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But we do know how many shares were issues, that’s the point of the pre-money valuation? I’m open to the idea that I’m being dumb here but YC valued the existing sharebase as worth £1.9bn and then £100m of new shares were issued for their investment?

Surely if Monzo have issued new shares which may have diluted the existing shares and changed their value, the company had an obligation to inform existing shareholders of this?

How many shares were issued? I know they were worth £100m, but how many is that? Unless I’m mistaken, we don’t know how many shares were issued.

Often during fund raises, new shares are issued. That means that the board has decided to create and sell a number of shares that previously weren’t in the share pot.

When I invested the company valuation was £30m and I purchased 997 shares for £500. Each share was worth about £0.50, meaning that there were roughly 60million shares.

If there were still 60m shares, each share would be worth around £33. However, there are now a lot more than 60m shares, as new shares have been created and issued at each round. If there are 200m shares now, then each one is worth about £10. Although the company has increased in value by over 66 times (30m vs 2bn), the share price hasn’t.

I owned about 0.001666667% of all the shares when I invested, but since the number of shares has increased, I now own far less of a percentage. However, this is irrelevant as I’m only interested in the share price. I still own 997 shares regardless of the percentage this represents.

Surely if Monzo have issued new shares which may have diluted the existing shares and changed their value, the company had an obligation to inform existing shareholders of this?

The number of shares you own hasn’t changed. This is the only important thing here. The share price has increased since you invested, and will hopefully continue to increase. The number of shares or dilution or anything else is broadly irrelevant.

We know how many shares are issued - what we don’t know is how many shares were previously unsold and how many YC bought.

It is all on Companies House - there is a statement of capital following an allotment of shares of £96,337,358.442147 (i.e. very close to the £100m investment) on 15 May 2019.

(EDIT: this accompanied a new allotment of 7,456 shares)

There was another statement of capital following an allotment of shares of £12.077122 on 23 May 2019 - this appears to have been the last allotment.

(EDIT: this accompanied a new allotment of 12,427 shares)

As at 23 May 2019 there were a total of 120,771,255 shares in issue, split across 7 different class of shares.

What I can’t seem to find out/ work out is how many shares YC specifically bought - I think we will likely have to await Monzo’s yearly accounts for that (likely to be up on Companies House in August/ September time).

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We don’t need to know how many YC bought, we just need to know the proportion of the company they bought. We know they bought £100m worth of shares at a valuation for the whole company of £1.9bn. Therefore I’d suggest there had been about a 5% dilution.

In simple terms, Monzo was worth £1bn and and it was worth £1.9bn before YC put their money in. That’s a 90% increase in the company value before any new shares were issued.

I didn’t say we did, just that I couldn’t from everything on Companies House get an idea as to what they paid per share (giving a rough indication of where we were at).

But then again if you take the shares in issue divided by pre-money valuation you’d get around £15.73222 a share. (Granted I’m not sure if this is an accurate way of assessing share price).