Monzo shares: how to buy

Monzo has reached its £20 million crowdfunding goal, but here's what happens now.

All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.

Monzo is one of the UK’s leading fintech companies. The challenger bank relies on smartphone technology, allowing consumers to handle all their finances online. After Monzo announced in September 2018 that it had reached the landmark of 1 million customers, it turned its focus to crowdfunding and how the Monzo community could be involved in the company’s continued growth.

Monzo then launched its third round of crowdfunding and allowed account holders to buy up to £2,000 in Monzo shares each, with the goal of raising £20 million in total.

This guide tells you what happens now if you bought the shares, and what you could consider instead if you missed out on the latest round at Monzo.

How to buy shares in Monzo

If you haven’t done it already, you’ve missed this round. The crowdfunding opened on 3 December at 10 am for existing investors and two days later for new ones. By 1pm on 5 December, Monzo had already reached its goal and closed the crowdfunding.

Monzo says that it collected just over £2 million from existing investors during the first two days and almost £18 million from new investors in less than three hours on 5 December.

Monzo shares were sold for £7.7145 each in this round; Monzo says that a year ago they were worth £2.3566.

Only Monzo customers who had set up an account by 26 November could buy Monzo shares. The crowdfunding was supposed stay open until 12 December, but around 36,000 people decided to take part, and the round closed early after hitting its target.

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What is Monzo?

Monzo is a digital “challenger” bank that’s offering an alternative to traditional high street banks. Monzo banking services are all on mobile phone – there are no branches.

Monzo launched in 2015 and initially only provided customers with a prepaid card. The company is now a fully licensed bank and it gives customers a full UK bank account and a Mastercard contactless debit card.

Read our full Monzo review to find out more, or head to our digital banking section to compare Monzo against competitors like Revolut, Starling Bank and N26.

Monzo is a fast-growing business. Customers have gone from 50,000 in September 2016 to 1 million in September 2018, and Monzo says that 2,000 people sign up every day.

Monzo says it now makes a profit on each customer that it has – however, the company as a whole is not profitable yet. Its last full accounts (up to 28 February, 2018) say that it has lost £30.5 million after tax in that year. It is quite common for new and expanding companies not to be profitable, but it’s clearly worth taking that into account if you’re considering investing.

Tom Blomfield is the CEO and co-founder of the company. Everything is run from Monzo’s offices in Moorgate, London, where around 300 people work.

This was the third time Monzo launched a crowdfunding round. The first was in 2016, when £1 million was raised in only one minute and 30 seconds, while the second, in 2017, made it to £12 million from an initial goal of £2.5 million.

At the end of October 2018, Monzo announced its last investment round from venture capital firms, which raised £85 million. Investors included US firms General Catalyst and Accel.

If you invested in Monzo: What happens now

Now you are officially a Monzo investor, and you will be for a while. Monzo is a private company and is not listed in the stock exchange, which means you cannot buy and sell shares at will.

When you buy the shares of a private company, it’s always a long-term investment, and it can be risky. If you want to resell, you’ll have to wait for a so-called “exit”, which may be, for example, a buyback from the company, the purchase of the company by another firm or an initial public offer (IPO, which happens if the company is to be listed in the stock exchange). Since it’s basically the company which is deciding when you trade the shares, there’s a greater risk that the shares will be worth less at that point than when you bought them.

You’re unlikely to be able to turn your investment into a profit any time soon, but the share price this year almost trebled last year’s price. And Monzo may, at some point, decide to pay dividends to its investors. However, this usually happens at a much later stage than the one Monzo is at now: companies usually pay dividends when they are profitable but don’t need or want to reinvest all their profits anymore.

In August 2018, Tom Blomfield gave an interview to Forbes and listed an IPO as one of the five necessary steps for Monzo to take to keep growing, together with internationalisation, becoming mainstream, achieving profitability and succession planning. However, an IPO seems unlikely to be soon.

For now, if you have invested, what you’ll get an “investor card”, an investor badge in the app and the chance to take part into investor meet-ups.

If you haven’t invested in Monzo: Other options

Monzo has done roughly one crowdfunding round a year since it was founded, so you may get another chance in 2019. Monzo usually announces its crowdfunding rounds well in advance on its blog page. Keep in mind that Monzo is known for its thriving community and solid base of loyal customers, which is the main reason why it reaches its crowdfunding goals so quickly, so if a new crowdfunding round is opened, you’ll have to be fast.

This bank is far from the only fast-growing tech start-up that has turned to crowdfunding; Revolut, for example, launched a round in 2016 and a second one in 2017.

We’ll cover these opportunities in Finder’s news but in the meantime, you can take a look at our investments page for more traditional share-trading options.

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All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.

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