Pre emption on series F raise

Hi everyone!

I was reading the techcrunch article on the recent raise

It mentions pretty much all the existing VC investors participating in it. I was wondering why existing investors didn’t get a shot at this, specifically given we have pre-emption rights. Were the crowdfunding investors the only ones left out of this round? That does sound really unfair given we’re supposed to all have the same rights with the shares.

If Crowdcube waved the series F and given the timeline of events, were the changes to the nominee terms created so that the pre-emption rights could be waived?

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Since the early days, Monzo has had the ability to waive preemption rights if there’s a majority vote on said waive.

It happened in 2017 when Monzo was growing faster than they anticipated and needed a cash injection from Passion Capital. They didn’t have the time to prepare the arranging of a crowd-raise so they invoked their right to waive preemption.

I imagine something similar has happened this time. For some business reason or another, they’ve decided it’s beneficial to the business not to give preemption to the crowd. I can see this being along the lines of confidentiality rather than a time sensitive thing. Although I’d totally understand if it was due to time as I can only imagine the enormous company-wide effort that’s required to raise funds via the crowd.

TLDR; Monzo has had the ability to waive preemption for a long time, if there’s a majority who agree (i.e, VC’s, C-levels, early employees). They’ll likely waive preemption for some business reason such as it being time sensitive, confidential, or too expensive to facilitate.


I’d like to have participated in the last round if it was possible.

However, as an investor, I’d much prefer Monzo focussing on growth than spending much resources on organising a crowdfunding (given the latest one was quite recent). At this scale, it is a rather complex thing to do and thus comes with a cost in manpower/organisation for Monzo. I believe this will be the reason pre-emption rights were waived.

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I think also if in the last round you bought £25 - £100 worth of shares, for Monzo to then go through with pre emption rights they would be paying you to invest as opposed to raising money to carry on the business , if they limited it to people that invested £500- 1000, there would have been more complaints about being discriminated against from the smaller holders etc etc , easier and probably cheaper / less expensive for Monzo to waive the rights.


I don’t think you’re entitled to pre-emption rights, particularly since they’ve changed the terms recently. If it helps view the frequent public crowdfunding rounds as your chance at keeping your stake.

For small shareholders pre-emption makes little sense for the shareholder, and zero sense for the company (who as Ian said would spend more organising such a round than they could raise from it). If you have a small stake, it doesn’t really matter what precise percentage of the company you own, and if you have a large stake, there is no way you could or should attempt to keep the same percentage of a much larger pie, you would very quickly end up investing way more of your net worth than is advisable in one risky startup.

I was part of a pre-emption round offered by Monzo earlier in their history. It was immensely frustrating as an investor, because they had to limit each person’s shares to a small pro-rata share, and ended up under-raising as a result. After participating in that I think it would have been far better just to have a larger open round, and I hope Monzo just continue to do regular crowdfunding rounds instead of bothering with pre-emption rounds which are fiddly and ultimately a bit pointless. It’d be nice if they did a crowdfunding each year or something in app as they did the last one, it would be a regular chance for investors to up their investment, and doing it regularly might make it easier perversely, instead of every raise being a one-off.

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There’s a rule that when VCs offer you good money at a good valuation you take it as you never know when you might need it and it might be more difficult to raise down the line. Monzo didn’t do a Series F, YC came to them with cash and they took it. It’s technically been called Series F but there wasn’t a planned raise, someone just dumped a load of cash on their laps.

I think Monzo may have disapplied pre-emption rights in their entirety in their Articles of Association.

The rule around pre-emption rights is held within statute law (Companies Act 2006) and is Section 551 I believe, this right can be removed from the outset of the company and forever (or subsequently depending on the type of share(s) being allotted).

As others have said, it would be an absolute logistical nightmare to pre-emptively offer the shares (as they would need to be on exactly the same terms as the YC offer) to every current shareholder before passing the rest onto YC. By then the ship may have sailed and YC may no longer have been interested.