Tencent joins latest funding round of digital bank MonzoLeigh Mc Gowranon January 4, 2022 at 10:20 Silicon RepublicSilicon Republic

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Chinese tech giant Tencent has taken a minority stake in Monzo, joining the latest funding round of the digital bank that has hit a valuation of $4.5bn.

This adds another well-known investor to the funding round led by the Abu Dhabi Growth Fund, which also led e-scooter company Lime’s $523m funding round in November last year. Monzo was also backed by new investors including New York-based Coatue.

Tencent’s investment is part of a $100m top-up to the $500m funding round and follows its £919m acquisition of British gaming company Sumo last July.

“The high level of investor interest we’ve had in this round is testament to our performance as well as the huge opportunity that lies ahead,” Monzo CEO TS Anil told Sky News.

“With the backing of some of the best names in the investment community, we’re going into next year with big ambitions – and we’re just getting started.”

This funding round comes after Monzo suffered significant losses earlier last year and was investigated for anti-money laundering compliance shortcomings by the UK’s top watchdog.

Despite the setbacks, Monzo claims to have doubled its revenue last year compared to 2020, having more than 5m customers and 100,000 being added every month.

Monzo told the Financial Times that its continued growth even during the pandemic helped investors gain confidence in the digital bank, culminating in this funding round despite the earlier setbacks.

Monzo is Europe’s third most valuable neobank, trailing behind Revolut (valued at $33bn) and Berlin-based N26 (valued at $9bn after a $900m funding round in October).

The UK-based digital bank is focused on growing its userbase, lending and boosting revenues, with the new funds going towards building new products including its own trading platform and covering its burn rate, according to Sifted.

In September 2021, Monzo stepped into the increasingly competitive ‘buy now, pay later’ market with its own service, Monzo Flex, which allows users to spread the cost of their purchases over three months interest-free. In July last year, Monzo COO Sujata Bhatia hinted at a possible IPO coming soon.

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