Alphabet’s Capital G is considering acquiring a stake in Monzo
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Capital G, a fund backed by Google’s parent company, Alphabet, is currently in talks to acquire a stake in the UK-based digital bank Monzo. The acquisition will reportedly come as part of the upcoming funding round, which is expected to raise up to 500 million GBP at a 4 billion GBP valuation for the challenger bank.
Google's parent company #Alphabet, is in talks to take a stake in #Monzo by investing between £300m/ £500m. Such a financing round would value Monzo at about £4bn. https://t.co/sraKNyNvsx
— Max Karpis (@maxkarpis) November 19, 2023
Monzo could raise anywhere between £300m and £500m
A recent report by Sky noted that Capital G is close to an agreement that would make it the leader of the round. The round itself is expected to be concluded by the end of this year.
Current estimates say that the round might raise anywhere between £300 million and £500 million. Another report from Sky, published about a month ago, stated that Monzo was in talks to raise £300 million, while its valuation at the time was £3.5 billion. With the increase in valuation, the prediction of how much the firm can raise grew as well.
The prediction is also based on the fact that Monzo raised £500 million back in 2021, when it was valued at $4.5 billion. This was three times the amount it raised compared to an earlier round that took place during the same year, while the challenger bank had a price tag of £1.1 billion.
Monzo has seen strong recovery after the pandemic
Despite the pandemic that put the financial world in a rather rocky situation, Monzo managed to land on its feet and bounce back rather strongly. At this point, it has over eight million users, and it is expected to hit profitability by the end of 2023. While this is considered to be the period of recovery, Monzo is advancing significantly faster than many of its peers.
Furthermore, earlier in November, the British firm also hired Connor Walsh, a former global product head at Cash App. Walsh joined Monzo to help lead a new push into the US market, which Monzo has been planning for some time.
The company was also exploring a merger with a Nordic bank Lunar during the summer of this year, which was to serve as its gateway into the European markets.
As for Alphabet’s Capital G, the fund has made several other major investment moves earlier, investing a total of £3.2 billon ($4 billion) into 55 different companies. Some of the major names include Stripe, SurveyMonkey, and Airbnb. Typically, the fund has a good eye for potential in the business world, and it tends to target those that could reach great heights.
Given the speed of Monzo’s recovery from the post-COVID market, the company stands to lead the new generation of banks that have emerged since the last financial crisis. However, Monzo does face some strong competition, including rivals such as Starling Bank and Revolut.
