Monzo's Crowdfunding Rounds


#21

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.


#22

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.


#23

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


(Kieran McHugh) #24

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.


Starling Discussion & Feedback
(If there's the wrong end of a stick, you'll find me holding it.) #25

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

All the best :+1:


(Marcel Ruhf) #26

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.


Starling Discussion & Feedback
Starling Discussion & Feedback
#27

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.


Starling Discussion & Feedback
(Alex Sherwood) #28

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.


#29

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.


Starling Discussion & Feedback
#30

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


Starling Discussion & Feedback
(Alex Sherwood) #31

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?


#32

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.


(Alex Sherwood) #33

I’d suggest not making the claim then.


(Marcel Ruhf) #34

That’s also not a given though - Monzo includes stock options in its compensation packages, so depending on their agreements, they could have access to this information.


#35

Stock options is just a form of remuneration. This does not give access to employees the right to certain sensitive discussions.


#36

I’m entitled to an opinion and the reason I said so is because Monzo would never come out to say that “we are unable to receive further investment from VCs.” That would be extremely foolish. Instead, they say "we are opening a crowdfunding round to share the success of the business with our valued customers.:


(Alex Sherwood) #37

Sharing facts is good. Sharing negative opinions about facts without knowing the facts or any way to back those opinions up, not so much.


#38

You don’t need facts in order to challenge what is generally believed to be held true. An opinion is normative in nature and is inherently not based on facts, hence the use of the term “opinion”.

You are entitled to agree or disagree with my opinion as you please without any judgement. However, painting my opinion as negative is very irresponsible of you, especially as you are unable to disprove it when I say “I don’t think they were able to receive further investment from VCs at the time”. If you don’t agree with my opinion, that’s okay with me, but it doesn’t make them any less valid.


(Alex Sherwood) #39

I don’t even know how to reply to that. Lets move on :slight_smile:


(Dan) #40

It isn’t generally believed. Everybody in this thread has disagreed with you.

So yes, you do need facts.