UK challenger Monzo has sealed a £60 million funding round at a valuation of £1.25 billion - a 40% discount on its previous sky high pricetag of £2 billion.
First reported by Business Insider, the downround reflects a waning investor appetite for pouring funds into loss-making fintech startups, particularly in the crowded challenger bank segment.
Monzo remains the fastest growing app-only bank in the UK, with some four million customers on the books. The downgrade on its valuation is likely to be reflected in other fintech Unicorns that rely heavily on large marketing expenditures and discounted pricing to generate growth.
Monzo has been cutting jobs and furloughing staff in an effort to stem the damage from the pandemic. Earlier this month it axed a further 120 jobs, hitting around eight per cent of the UK-based startup's workforce. They are separate from the 295 positions which were furloughed in March and the 165 redundancies associated with the planned closure of a Las Vegas customer support office.
The shake-up has also seen Monzo chief Tom Blomfield make way for TS Anil, a former global head of payment products and platforms at Visa, as the firm strives to reach a target of becoming cash-flow positive in 2021.
Investors in the new round, include Swiss fund Reference Capital and Vanderbilt University alongside existing investors Y Combinator, Accel, Thrive Capital, and Passion Capital.