I find it funny that people on here actually belie that Monzo went through crowdfunding rounds so they can share the success of the bank with customers 
Tom and co are extremely nice people, and fancy handing out free cash to everyoneâŚ
It is true.
The crowdfunding component of the funding round was a huge challenge and a lot of effort to coordinate. It would have probably been much easier to not do it, and accept the money from institutional investors instead. But itâs extremely important to Tom and everyone here that customers can own a part of the bank.
For those who have invested (myself included before I became staff), the value of their shares has increased a lot, so they are indeed sharing in the success of the bank.
Hope this makes sense.
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I hope you realise the crowdfunding wasnât done because Tom was feeling generous, but out of necessity. Institutional investors will not back a company with a zero track record who are seeking large sums of cash and crowdfunding was the best and probably only way to to raise the sums needed at the time.
The company needed cash to get going and crowdfunding enabled the early days of Mondo to begin. This led to good growth and a proven track record, which gave the institutional investors some confidence and allowed them to invest large sums of money required to run a bank.
Institutional investors are a LOT more value to a startup than a bunch of strangers put together over the internet. If Monzo could have received investment and backing from institutional investors from day 1 without crowdfunding, is like to think the people running my bank are intelligent enough to do so.
The growth in the value of your investment is simply the result of taking a huge risk of investing in an unknown startup, with no proven track record which is to be expected. Youâre a shareholder and shareholders benefit with the growth of the business. Without you guys, we wouldnât be here and Monzo would never have started in the first place. Sharing the success is just the by product and not the aim itself. If Monzo goes out of business tomorrow, youâve also lost your investment. It works both ways, theyâre sharing both the success and failures or risks/rewards with the shareholders who own the company, just like any other company. I wonât go all financey and portfolio theory here, but I am almost certain that at least 90% of people invested in Monzo are not being rewarded for the risk they are taking by being an investor.
If they wanted to be nice, why donât hey just offer us all 10% interest on our balance
People are so brainwashed and misinformed on this forum, itâs unbelievable! Iâm actually very shocked people think equity is given away through crowdfunding because itâs a nice thing to do. Monzo are here to run a business, not a charityâŚ
Well that turned out way longer than I expected.
This is incorrect. Our Series A did not include a crowdfunding component and was done through a venture capital firm, Passion Capital.
They did get investment and backing exclusively from VCs from âday oneâ (the first round).
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Okay, maybe I misunderstood the specifics regarding their fund raises but the point remains. Monzo didnât crowdfund because they were being nice. Perhaps Passion werenât willing to invest any more at the time or Monzo weâre struggling to find other investors. Who knows, but itâs certainly not because they were being nice.
You seem to have written your post based on the assumption that people here donât understand the reality of the situation but they do 
As Kieranâs said, it wasnât necessary to use crowdfunding for this latest raise.
Institutional investors are essential at this point because of the large amount of capital that needs to be raised. But crowdfunding investors are powerful advocates for Monzo. Lots of Monzoâs growth has come from word of mouth referrals.
Iâd like to think that Monzo cares enough about itâs users to give them an opportunity to invest in itâs success. Iâm not aware of real downsides to that approach, assuming institutional investors are included in the round, which they have been.
The crowdfunders know this..
The value of crowdfunders investments from the round before the last increased by over 50% this round.
Because theyâre intelligent & have a sustainable business model.
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Thatâs not correct - institutional investors put in ÂŁ71M in the last round alone.
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Thatâs OK. I appreciate you are cynical about Monzoâs motivations for crowdfunding, and that is your right. It is super important to do research before calling people âbrainwashedâ and âmisinformedâ
I actually agree with you. The point of the crowdfunding round wasnât to âbe niceâ. It was to give people an investment opportunity, create excitement and a buzz, to reward people financially for being our supporters, and to let our customers own part of the bank. It has been very successful in these aspects.
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What would have been the alternatives if it wasnât necessary?
And why do you need to be an investor to spread the service through word of mouth? Anyone can do this without being an investor.
Not once did I mention that this is a downside. I simply said it was the by-product, but not the stated aim. Monzo werenât doing it to be nice. They have a business to run and profits to make. By your logic, every listed company cares enough about itâs users to give them an opportunity to invest in itâs success.
What has this got to do with the risk being taken by people? The investors could be rewarded a lot more for the risk they are currently taking in Monzo alone. Just to throw some numbers out there, say people are currently taking a 50% risk for a 100% return, Itâs actually possible to receive >100% return by also taking an overall risk profile of 50% if investing wisely. No more risk being taken, but higher returns and is what I mean when I say most people are probably not being rewarded for the risks they are taking. Donât quote me on the numbers, just an illustration.
I know I may be going a little off topic here; but I love that sentence.
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Once Monzo has shown good prospects and hit the targets required by investors. Also the investment has been diversified amongst various investors, meaning they are actually taking far less risk by investing in Monzo. Again this doesnât contradict anything iâve said.
Itâs sad when people seem to go out of their way to score an own goal, when itâs not required.
Iâve lost all sight of what is going to be achieved by continuing to fly off topic.
(Oh wow, I got an almost football remark in a post during world cup time - despite hating football!)
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This wasnât aimed at you in particular and apologies if it came across as that, but more at people with who Monzo can never do any wrong.
Iâd suggest you read Kieranâs post again.
You donât, it just gives people another reason to spread the word.
Kieranâs already addressed this point.
I didnât say that.
Nothing. I didnât say it did have anything to do with the risk. I was highlighting the fact that your guess that most investors have lost money is incorrect.
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Again, the point was simply to raise money. All what you have mentioned above are just the by-product of doing so. If giving people an investment opportunity, create excitement and a buzz, to reward people financially for being our supporters, and to let our customers own part of the bank was the point, why didnât they just give out free shares through the random draw, rather than having people pay for them if they were lucky enough to be selected?
I think you may not be seeing the point of crowdfunding. It is to raise money, but not simply to raise money. The reasons @kieranmch gave are in addition to raising money.
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Doesnât answer the questionâŚ
Not once did I say investors have lost their money. As things stands, theyâre worth a lot more than they have paid for them.
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I would argue that crowdfunding isnât as profitable for Monzo as you think it is- referencing Tomâs post, each crowdfunding investor actually costs Monzo money in administrative fees.
Taking ÂŁ10 from 100,000 people would raise ÂŁ1m but would cost us ÂŁ2m
Taking a small amount from each customer would mean Monzo would lose more money than they gained. He says that he would love if the bank was entirely crowdfunded, but itâs not possible.
Iâve linked the post below.
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You said that
but a) the value of their investments has increased b) should Monzoâs valuation continue to increase, theyâll be rewarded more.
We donât know whether the valuation will increase of course, taking that risk is how investing / crowdfunding works. Itâs not possible to quantify the risk that crowdfunders have taken by investing in Monzo.
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Passion Capital and other institutional investors wouldnât be happy if that thappened. That would reduce their majority, for essentially nothing.
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