U.K. challenger bank Monzo is raising more than $500 million (£377m) at a valuation of $4.5 billion (£3.4bn) as it gets ready to take a deeper dive into cryptocurrency trading and further evolve its buy now, pay later (BNPL) product.
The first part of the funding closed with $480 million (£360 million), Monzo said in the community forum on its website. The remainder of the round is anticipated to close in the coming weeks.
Abu Dhabi Growth Fund led the round, with participation from new investors Coatue Management and Alpha Wave Ventures and existing backers Accel and Goodwater.
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“This investment means we’ll grow further and faster as we continue on our journey to reinvent banking, and become the one app that sits at the center of our customers’ financial lives,” Monzo CEO TS Anil told Financial Times.
The company’s valuation escalated 300 percent since the start of 2021, buoyed by a surge in new customer sign-ups that helped double its revenues.
“We’ve seen record revenues, launched new products and tools and continued to top the charts for our services. We’ve hired some incredible talent,” Anil said.
Read more: Report: Monzo Jumps Into BNPL
Monzo Flex, its BNPL product, offers pay in three installments at 0 percent interest, or pay in six and 12 installments at 19 percent APR (variable).
According to PYMNTS research, roughly 61 percent of small and medium-sized businesses (SMBs) indicated that customers would switch to merchants that provide BNPL options and that BNPL closes sales that would not otherwise happen.
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Even at $4.5 billion, the digital bank’s valuation is behind European competitors like Revolut, valued at $33 billion and N26 at $9 billion. Monzo is above rival Sterling Bank’s $1.5 billion.
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