Monzo's Crowdfunding Rounds

This wasn’t 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.

I’d suggest you read Kieran’s post again.

You don’t, it just gives people another reason to spread the word.

Kieran’s already addressed this point.

I didn’t say that.

Nothing. I didn’t 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.


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 didn’t 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.


Doesn’t answer the question…

Not once did I say investors have lost their money. As things stands, they’re worth a lot more than they have paid for them.

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I would argue that crowdfunding isn’t as profitable for Monzo as you think it is- referencing Tom’s post, each crowdfunding investor actually costs Monzo money in administrative fees.

Taking £10 from 100,000 people would raise £1m but would cost us £2m :frowning:

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 it’s not possible.

I’ve linked the post below.


You said that

but a) the value of their investments has increased b) should Monzo’s valuation continue to increase, they’ll be rewarded more.

We don’t know whether the valuation will increase of course, taking that risk is how investing / crowdfunding works. It’s not possible to quantify the risk that crowdfunders have taken by investing in Monzo.


Passion Capital and other institutional investors wouldn’t be happy if that thappened. That would reduce their majority, for essentially nothing.


Lets not deceive ourselves here. The sole and ONLY reason you will go to crowdfunding is to raise money. It just so happens that crowdfunding as advantages and disadvantages attached to them. Some of the advantages have already been highlighted have been discussed. If you didn’t want to raise money, you wouldn’t go through a crowd fund. If you were being nice and wanted to share the success of the company, you will simply give the shares out.

Of course the crowdfunding route is not as profitable. There are increased transaction costs and administrative burdens etc involved. But of the options available to Monzo at the time, I believe crowdfunding was the best way to go.

Please show me where, as I think you must have misunderstood what I had said.

This is an important part of the point, but not the only part. As I’ve said already, it would have been way less administration work if the money came from VCs, but we made provisions explicitly for crowdfunding too.

Other challengers have given out free shares in their company. Each customer would receive 1 share each or something. I think it’s hardly worth the effort and doesn’t enable the company to raise capital in the process.

I’m not disagreeing that the main point of a crowdfunding round is to raise money, but your assessment that this was the only motivation is not a fair one, in my view. If it was, I suspect Monzo would have just accepted funds only from VCs.


OK. It’s clear that we disagree on this. You’ve said your bit, and I’ve said mine.

All the best :+1:


Of course it is.
But my point is that they could have received that money from their existing, as well as new, investors. The advantages for Monzo have already been spelled out - customers gain s stake in the company, and feel like they are part of its success (or failure, if it goes wrong). They might then be more inclined to spread the word further.

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Actually, this is very possible and will vary per investor. Some investors will have taken huge risks by investing in Monzo others not so much. Calculating your exposure to risk takes into account where else you have invested and the composition of your portfolio. If you have a well diversified portfolio, this massively reduces your risk profile while offering even greater levels of returns.

You seem to be confusing the risk of making an investment i.e. the likelihood that you will earn a return on that investment with the exposure of your portfolio i.e. what portion of your portfolio is made up of shares in a particular company. It is possible to calculate the latter but not the former.


In this scenario, it is clear that sharing the success of the company is the aim and not the actual raising of cash.

Okay, maybe it was a little unfair of me to say it was the only reason. What I was trying to get across was that the main objective was to raise cash. Of the options available at the time, crowdfunding had the most advantages attached to it (such as sharing the success of the company with customers), hence why it was the choses route.

If i’m being cynical, I don’t think VCs were willing to put more cash in at the time and Monzo needed cash. Crowdfunding is the next logical step.

This is where I disagree. Monzo can’t always just get cash from current investors as they wish.

I’m pretty sure that you have absolutely no evidence to back that up - whereas a member of the team has said that it’s incorrect - or do you?


I would never be able to back this up as i’m not privy to the discussion between the institutional investors and the Monzo board. Because a member of the team makes a claim doesn’t mean anything. They weren’t privy to the discussion either.

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