As a investor sure look at the financials in detail but criticising financials like this seems off. Monzo has done really well to reduce the average cost per/account to Ā£15 per/account as stated in their last annual report. And they are moving in the right direction, with what can only be considered as a āliteā bank, hence a lot of users not going full Monzo or ditching their old accounts and Monzo is working on fixing this.
The opinion piece is off, it mentions young and stretched, has the author never been young? Are they now not richer than what they were? Then it goes on to say lend up to Ā£1,000 to buy laptops and boilersā¦ really? Then thereās the Ā£150 which has no further explanation or source and finally throw in a mention of down rounds and comparison to a long established provider. In which case why bother doing anythingā¦ curious on what the author of that post thinks Monzo is actually worth.
I donāt think Safās complaining about skepticism in general, theyāve just pointed out that quoting that particular figure is potentially misleading.
At no point did I say Saf was complaining, Iām just rationalising where such figures may have come from and that like he said narratives can be spun, but on both sides.
As it is above the European Unionās ā¬8m crowdfunding cap, Monzo will be required to build a formal prospectus for the round.
At its last crowdfunding round earlier this year, rival banking fintech Revolut received more than 40,000 requests to pre-register on equity crowdfunding platform Seedrs. As the round closed, just under 5,000 investors managed to join the round at a cap of Ā£1,000 per investor.
Iām hoping they do something similar and cap the round @ a reasonable limit.
This was mentioned on their slack. They āaccidentallyā left a mention of it in an Android release. Guys on the diff the packages every time thereās a release.
So letās say they adopt the same cap. For their last crowdfunding round just over 40k users pledged to invest & if the same number invested this time & they all invested the maximum Ā£1k, 20k users would get to invest.
Except Monzo has 6x as many users now, compared to how many they had in March 2017. So if 6x as many people want to invest, theyād have to cap the investments at about Ā£80. Which isnāt the end of the world.
I see your logic. However, the average pledge in the last round was Ā£293 (= Ā£12,000,000/41,000).
Thereās inevitably going to be the trade off between maximising the number of investors who can take part and imposing a satisfying cap on investment.
In both Monzoās and Revolutās latest rounds, many investors were left disappointed because theyāre simply oversubscribed. Ā£80 limit would appear too low and maybe Ā£1000 might be deemed too high. Ā£500 would be great in my opinion but I imagine it would annoy existing crowdfund investors for various reasons I disagree with.
I donāt remember if it was on this forum - canāt find it - but somewhere I remember a crowdfunded startup explaining that if they donāt cap the number of investor participants at a high enough average investment, rather than raising money, the investment ends up costing them money due to the admin overheads.
It was Monzoās CEO who said that in their community -
We would love to include more people in our crowdfunding - I speak to people every week who are disappointed that they missed out in previous rounds. Itās really frustrating for us that we canāt let everyone put money in who would like to.
There are 2 issues;
Thereās a ā¬5m EU cap on crowdfunding (which gets reset every 12 months).
Administration fees cost around Ā£4 per crowd investor per year. Weāll probably need to pay these for at least 5 years until we eventually IPO. So call it Ā£20 per investor in admin charges.
Taking Ā£10 from 100,000 people would raise Ā£1m but would cost us Ā£2m !
I would love it if Monzo was a bank that was entirely funded by its userbase. Weāre exploring ways of making this possible, but itās sadly not straightforward.
@saf I think some of the skepticism really comes from the fact that their proposed model is untested and unproven as it currently stands. I think a lot of commentators, users or financial services people simply donāt understand the model. Even some people within the heady world of FinTech donāt buy into it, yet.
So the lack of understanding leads on to the pesky issue of valuation. When you have a paradigm shifting model, with no real multiples to derive a meaningful valuation, assessing all the other factors, tangible or otherwise becomes more of an art than a science. The valuation trap is compounded by the propensity to compare to what we know, i.e. other banks.
User growth is great, ātech orientedā valuations are great, but if itās always a question of jam tomorrow, at some point youāre going to need to come up with the goods else things start to unravel. Just ask Elon!
I am totally behind Monzo though, I support both the vision and the ambition, but having a fair shot a success is, and will be for at least a little while yet predicated on their ability to raise new money, which in turn relies on investors keeping the faith.
This is a super positive step, itāll be the first taste of a prospectus for a lot of investors.
Even at a cap of Ā£1000 itās really just a token gesture to the crowd, but itās important as it could be the first time a lot of people have invested directly in a business, and if theyāre customers, itās a business they know and mostly love. On that basis I could get behind Ā£500 if itās a question of maximum inclusion, but how expensive will the buy in be? And does it matter?
So this is my first post here. Ive come straight from the Monzo community and I have switched my full banking system to Monzo, which we call #fullmonzo. To be honest its the greatest banking experience Ive ever had in my life and I couldnāt think of ever going back to a legacy bank. Monzo is growing day by day and I think investing in them is a fantastic idea. I certainly will be investing in them once Freetrade launches. I have over 50k people ahead of me though. With the launch of a pot of money earning interest happening in the next few weeks, I would love if there was a collab where a pot could be viewed in Monzo app but held by Freetrade and therefore have all my investments and portfolio in front of me. Exciting time ahead of us!
You will probably notice that many Freetrade community members would be aware of Monzo, so you may meet people that support them as much as you do (myself included)
Just to clarify, you could not invest in Monzo via Freetrade, you will most likely do that on Crowdcube.
Donāt think too much of the queue, you are in the luckiest position to have joined just a month before the anticipated launch, hence your total wait will be by miles shorter than those who are 1-1000 in the queue
And just as you say, many of us also favour Freetrade-Monzo integration and the idea of users having part of their [not needed shortly] cash invested in the market, so watch that space too!
For future reference, Iām guessing the billion plus valuationās going to make people pause before investing in this next round so hereās our guide to help you figure out whether itās a good idea or not -