Upcoming funding round discriminating non-UK early investors


(Excited about Christmas) #101

This is simply not true.


#102

I don’t think I have claimed it’s a legal right. I personally just feel it is not ideal for somebody that has made significant investments to date for a variety of reasons. And I personally would be upset/can understand the OP’s perspective.

Perhaps this is because I don’t think Monzo is revelatory. I think it’s a very appealing product/Company/set of people to invest in.

Either way, I don’t believe they have broken any rules.


(🤦‍♂️ abofm.club 🤦‍♂️) #103

Some people.


#104

I’m not talking about Monzo’s case. In general, these rights are automatically provided for by law in the UK.


(Excited about Christmas) #105

Would that be one of those laws that relates to some companies and not others?


#106

For me, Monzo is defined by its inclusivity, international outlook and the desire to do the right thing. Allowing the crowd to invest in earlier rounds and going to the trouble of producing a prospectus to enable customers to invest this time around exemplifies this. However, I think that issuing shares with pre-emption rights that are always waived to the benefit of institutional investors and now excluding existing overseas investors from topping up their holdings is not really Monzo-esque - a much higher standard against which to judge the company than mere fairness or legality.


(Jolin) #107

This was done to death in the last crowdfunding round. For crowdfunding investors, the portion of the company held is meaningless, as it’s so small. It matters for VCs who hold significant proportions, so impacts their control/influence. But for crowdfunders, ‘preemption’ is just a courtesy to give them an opportunity to make another, separate, investment.

Why? The three (separate) investments they’ve made will be worth more when they take them out, at current valuations. Not participating in this round in no way diminishes previous investments.


(Duncan) #108

No they were not. The “non-public” raise issues class E shares also. It’s all in the prospectus.


(Matt C) #109

Has anyone from Monzo replied in this thread yet? They would be best placed to explain why they have done it this way, and if there are limitations we are unaware of.


(Duncan) #110

Well, well, well. It’s time to bust the dilution myth once again! I see you’ve all jumped squarely on the band wagon.

You can have an overview here, or just jump straight to the handy spreadsheet at the bottom of this post, which lays things out inescapably.

I know it’s quite counter-intuitive, but if you look at the numbers you’ll see that there really is no such thing for crowd-funders as dilution. It’s not a meaningful thing.

Regarding the, er, actual topic issue, I’m on @from’s side. But NOT for reasons of “dilution”. It’s just a nice courtesy to be asked to participate in future rounds. On the upside, if they invested more in the first round, then this round is, proportionally, not really much to miss.


Share Dilution
(Duncan) #111

If it’s not unfair then why have Monzo allowed UK-resident prior investors to have two days head start?


(Steve Daniels) #112

I’m reading it properly now. I shouldn’t have presumed so thanks for pointing out my ignorance!


(MikeF) #113

I don’t think I said it’s not unfair (although I might have somewhere, there are so many posts…) my point is better bluntly summarised as ‘if it is unfair, so what?’.


(Duncan) #114

Fair enough! Perhaps the only counterpoint is that the whole crowdfunding thing is about involving people, keeping them happy, having a nice fuzzy feeling. And excluding previous investors… not so much. Perhaps there was some legal requirement. Who knows.


#115

I think it is more than a nice courtesy. It is the right as an owner to make a new separate investment in a company ahead of new shareholders in proportion to your existing holding.


(MikeF) #116

True, but as I said, I don’t think they can keep everyone happy regardless of what they do so they just have to pick a route and go for it.


(Duncan) #117

Well, I disagree because this isn’t a zero-sum game. If it were the case that a certain class of people got preference at the expense of another then yes. But this is just about one side losing. Nobody else wins. They might not even fill the £20m.


#118

Reading between the lines the reason is investment requires a Monzo account, only UK residents can have one, so only UK residents can invest. Alternative would be a few hundred thousand in card fees…


( related to Monzo CEO, Investor in Monzo ) #119

I don’t think it is a legal right , a company can choose to confer that right just as easily as it can withdraw that right , if the majority 75% in this case , I think , choose to withdraw that privilege they can vote on their articles of association and its withdrawn


#120

Monzo is a virtuous company, though, so having conferred the right I would not expect it to be so quickly withdrawn!