British neobank Monzo reaches $5 billion valuation after $430 million raise

British digital bank Monzo raised $430 million in fresh capital from investors on Tuesday to help it resume services in the US

Monzo raised the money in a new round of funding led by CapitalG, the independent venture arm of Google’s parent company Alphabet.

HongShan, the Chinese venture capital firm that spun off from Sequoia Capital last year, also backed the round, along with existing backers Tencent and Passion Capital.

Monzo, which is one of the UK’s most popular app-only banks, said the fresh cash would be used to accelerate its expansion plans. The bank’s CEO, TS Anil, told the Financial Times the capital would allow Monzo to break into the US market after its previous foray was limited by US regulators.

“With the support of global investors, we have the rocket fuel to pursue our ambitions harder and faster, building Monzo into an app that sits at the center of our customers’ financial lives,” Monzo CEO TS Anil said in statement.

“Every milestone we’ve reached up to this point has given us more strength and momentum to take steps toward our mission—now we’re going to soar to even greater heights and take advantage of the tremendous opportunity ahead of us.”

The fresh cash comes from Monzo’s rapid growth in 2023.

The British neobank went into the black for the first time in the first two months of 2023. It came after Monzo reported an 88% rise in revenue to £214.5 million ($272 million), up from £114 million in 2022.

A fair portion of the money will be allocated to help Monzo restart its services in the US

Monzo previously attempted to launch in the US in 2019 with a beta product available to US users. The company operated in the US through a partnership with community bank Sutton Bank.

It wanted to get a full US banking license but was forced to abandon that plan in 2021 after a fruitless two-year tussle with regulators.

Since then, Monzo has chosen to focus on re-entering the US with a partnership that will allow it to bypass the requirement to obtain a full banking license to service US customers.

The firm began searching for a US CEO in 2023 to lead a renewed attempt to break into the US market. It hired Connor Walsh, a former executive at fintech firm Block’s apps division, as its new US CEO in October 2023.

Monzo’s new round also comes after a focus on new products for the bank. Monzo did its thing first attempt at investment products in 2023, launching investment packages that allow clients to park their money in a range of funds managed by BlackRock with varying levels of risk.