The funds from its latest funding round will be used to double its existing workforce.
On Wednesday, British app-only bank Monzo disclosed that its backers now value it at $1.3 billion (1 billion pounds) thus giving it a unicorn status. The increase in valuation comes after Monzo raised 85 million pounds in its latest funding round the proceeds of which will be used to double its workforce.
“Basically, every department is going to double in the next 12 months.”
Monzo unicorn status comes after its rival Revolut passed the landmark earlier this year.
Launched in 2015, Monzo has yet to turn a profit. The app-only bank said its capital value had increased from 280 million pounds a year ago.
Its backers include Orange Digital Ventures and Passion Capital.
Since their launch in recent years, app-only banks are enjoying a rapid rise in userbase and investor attention. Monzo’s userbase has already touched 1.1 million.
According to Tom Blomfield, Monzo’s CEO, currently around 100,000 new Monzo accounts are opened each month; at this rate the bank’s user base is likely to reach 2.3 million within a year.
However, supporting a fast growing user base comes with costs attached. Monzo saw its pre-tax loss more than quadruple to 33.1 million pounds in the year to February.
Every new customer initially cost the bank around 65 pounds per year. However some of that cost has since been cut after Monzo launched some lending, which helped to turn those metrics around. The bank has now started making nearly 5 pounds per year from every new account that is being opened, said Blomfield.
Blomfield went on to add, a quarter of Monzo users now deposit their salary with the bank, up from 8% at the start of 2018.
Ino order for it to make money, Monzo needs customers to treat their accounts as their main bank. Mondo’s business model relies on collecting a sizeable tract of user data based on which it can then suggest appropriate products or services from a range of providers; naturally it will take a commission when this is successful.
Monzo also mentioned, it is currently developing a savings account in partnership with an undisclosed bank; it would launch a crowdfunding round, open to customers and retail investors, by the end of 2018.
Its latest funding round was lead by venture capital firms Accel Partners and General Catalyst with existing investors being Goodwater, Passion Capital, Orange Digital Ventures, Thrive Capital and Stripe.