When is Monzo expecting to make a profit

The VCs knocked 40% off the valuation. If it was any kind of vote of confidence the valuation would be up. A downround implies the company is on the ropes and is given last chance to sort itself itself out.


Yep, VCs put more money into a company about to go pop, because they fancied throwing some cash around.

They invested at what they thought the company is worth, which is still over a billion, and are investing in a business plan they believe will bring them returns, not just for the lols

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It is not as black and white as you make out. It is all about risk vs reward. They may well think that if they put no more in, they would get nothing back. Put some in and it might help get Monzo towards profitablity. If they had full confidence then there would not have been a 40% valuation reduction.

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If they had full confidence then there would not have been a 40% valuation reduction.

or you could look at it as Monzo squeezed every little bit of value from their funding before asking for more funding, and therefore keeping more of the pie for themselves , the big word IF the covid pandemic hadn’t have occurred the valuation COULD have been in the region of £2, maybe £3 Bn when they had used up the majority of previous funds, so the VCs would be getting less of the pie of a business about to hit profitability, as it happened, covid did happen , a lot of the economy tanked and Monzo became short of funds , the VCs turned around and said we know you’re short of funds but we still love your business because basically we can see your path to profit is happening, you have hit most of your estimated targets and they are improving - and they will have far more due diligence than us crowdfunders , but we want more of the pie, we’re not your friends, we’re investors :slight_smile: here take my £60 million


Value and confidence aren’t quite the same thing.

You could have a high degree of confidence in a company but still believe that they were overvalued.

would you pay the 40% premium in the first place in previous funding rounds , they (the VCs) presumably agreed with the “valuation” then, maybe they agreed with the hype… or saw the actual figures ?

Yes. And also no :smiley:

Most startups lose money, and their investors give them money to spend. In a way you could see it as spending money they’ve been given to spend as opposed to ‘losing’.

Still, as of the last financial report, Monzo was losing far too much - £115m a year at that point. £115m a year is a huge amount of money for a relatively small business to keep finding each year.

Nobody should be under any illusion that a 40% down valuation is not a good sign for a start up at this stage. Monzo wouldn’t have accepted 40% less if there were better offers available elsewhere, so it’s not just a reflection of one or two investors but of their attractiveness to the market as a whole.

But if there wasn’t a decent chance of Monzo surviving and growing then nobody would invest at all. VC firms and other startup investors are used to cutting businesses loose when they need to - it’s part of how they operate. And Monzo is still growing in terms of customer numbers, and releasing new products which may make it profitable.

The best thing people like us can do is watch what the experienced investors are doing as a gauge and then try to guess why they are doing it. Monzo’s investors are still investing, so that’s good. But I imagine they are also putting a lot of pressure on Monzo to become profitable soon, or at least show what profitability looks like. Perhaps the down valuation is purely down to the additional risk presented by the pandemic, or perhaps it also reflects the annual losses of the year before, or increased competition in markets like the US. Really difficult to say but the next annual report will be interesting, as will the next funding round.

Most importantly - this is all about the fun of watching start ups and speculating. There’s really no need for customers to be worried about Monzo’s share price, losses etc, these things don’t affect them and their money is safe either way.

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If you had been investing for around 10 years in stocks, you’d know that VCs putting money doesn’t hold as a strong argument for the same being lucrative to retail investors.

It could be just to average their position to reduce loss. They can make money or arbitrage deals as well. But, a common investor like us isn’t like that. We don’t have billions of dollars to buy shares at preferential rates - you are fine if you do.

If you had invested the same amount in Square Inc (picked it as it’s in similar domain) last year same time, your investment would be 241% by now.

Monzo doubled its losses last year and they themselves admitted that they are on the verge of not being able to continue.

Let’s hypothetically assume that they are going to be acquired by a large company. You’d think that you’ll make a profit. With shares being sold at 40% loss now you might make a 30% profit after 3-4 years when the business picks up momentum and “maybe” starts making profit. You’ll break even or make a 10% profit if situations are in your favor. This you could have easily made by simply investing in index funds with much less of your hair falling out every year due to the tension. And in the meantime, Y Combinator would have made a decent profit leaving you thinking it’s unfair.

But, either way - I’m not saying that you are wrong and I’m right. Anything can happen in this industry. But, in this case the chances of making a loss in a couple of years is much higher compared to chances of making a profit.

Many here in the forum are hardcore Monzo fans who get hurt by any negative sentiments. My intention is not to hurt you if you are that person :slight_smile: Investment should be driven by logic and profit instead of love for a product or your heart.

I do wish that no one makes any loss, everyone is rich and I’m 100% wrong after a couple of years. You would say that I’m wrong and I’d be happy about it as you made good gains. Happy investing.

Did they?

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going concern noises intensify


No, they didn’t

There was some accountant language around the threats to remaining a going concern on account of the conditions, but they have enough cash to hand to keep going for the next two years either way

Doesn’t mean they will, but there’ll be no sudden crash out

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Yes, they did: Monzo losses double as UK digital bank warns of pandemic uncertainty

I can’t read that due to the pop-ups and god knows what else is on that site. But it isn’t true. They’re sensationalising for people that didn’t read the report themselves.

Yes they did. Check the posted link. And yes, doesn’t mean they’ll crash. I’m in no way saying that it will plummet. I’m simply saying that comparatively there are other players in a similar domain who are having much better cash flow based business. You might make good profits in long term but would have better chances of making much bigger profits if you’d invest in others - maybe Square or Paypal in a similar domain. It’s a short term and long term growth based option in the market with much better chances.

But it might be just my perception and I could be totally wrong. Monzo might be the next big shot. Maybe I’m simply trying to reduce the risks associated with investing by going for safer bets.

If you read the reply right above yours from nine day ago, you’ll see that they did not ‘admit they were on the verge of not being able to continue’:


Not sure how you are declaring something as not true without being able to read it. It’s a CNBC news article.

You appear to be a hardcore Monzo fan in love with the brand which is a good thing while using it but a bad thing while making investing decisions. Investing needs to be decoupled from emotions. I do hope the investment works for you. Again, I’m not making anything up. It’s simply what Monzo said and is available in CNBC.

That report does not say what you seem to think it says.

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Beat me to it, Monzo are going to be very much fine in my opinion

I am a long way from a Monzo fan. And I get why you say that, but actually it’s not what the article says.

The article is pointing an an auditor’s statement (not actually a Monzo statement) that there was significant doubt over its ability to continue as a going concern. Although I do think Monzo somewhat underplayed the relevance of that, it still doesn’t mean they were ‘on the verge of collapse’.

What it meant in this case (thereabouts) is that a) They didn’t have enough cash in the bank to keep going indefinitely without funding and b) there was doubt as to whether they would be able to raise funding.

a) is normal for startups. b) is more relevant but, the auditors would have taken market uncertainty in the pandemic into account - with that considered there was significant doubt over any company’s ability to raise finance.

But they still had enough money for the short term to go until their next funding round. Had the funding round failed, and the reserves dried up, then they would have been on the verge of collapse. But it didn’t, they raised more money as planned and kept going.


Just going to throw this out there but do you think Monzo would get bailed out if it went under?