UK neobank Monzo hits $5 billion valuation after $430 million raise

British digital bank Monzo on Tuesday raised $430 million in fresh capital from investors to help it relaunch its services in the U.S.

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

HongShan, the Chinese venture capital firm that split from Sequoia Capital last year, also backed the round, alongside existing backers Tencent and Passion Capital.

Monzo, which is one of the U.K.’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 crack the U.S. market after its previous foray was curtailed by U.S. regulators.

“With backing from global investors, we have the rocket fuel to go after our ambitions harder and faster, building Monzo into the one app that sits at the centre of our customers’ financial lives,” Monzo CEO TS Anil said in a statement.

“Each milestone we’ve reached to this point has given us more strength and speed to make strides towards our mission — now we’ll scale to even greater heights and seize the huge opportunity ahead.”

The fresh cash comes off the back of bumper growth for Monzo in 2023.

The U.K. neobank entered the black for the first time in the first two months of 2023. That came as Monzo reported 88% growth in revenues to £214.5 million ($272 million), up from £114 million in 2022.

A fair portion of the cash will be allocated toward helping Monzo relaunch its services in the U.S.

Monzo previously tried launching in the U.S. in 2019, with a beta product available for American consumers. The company was live in the U.S. via a partnership with the community bank Sutton Bank.

It wanted to acquire a full U.S. bank license, but it was forced to abandon this plan in 2021 after a fruitless two-year discourse with regulatory authorities.

Monzo has since opted to focus on re-entering the U.S. with a partnership that would allow it to bypass the requirement of getting a full bank license to serve U.S. customers.

The firm began a search for a U.S. CEO in 2023 to spearhead a renewed attempt at cracking the American market. It hired Conor Walsh, a former executive at fintech firm Block’s Cash App division, as its new U.S. CEO in October 2023.

Monzo’s new round also comes after a focus on new products for the bank. Monzo made its first foray into investment products in 2023, launching investment pots that allow customers to park their cash at a range of funds managed by BlackRock with different levels of risk.

Monzo said it now has more than 9 million retail customers in the U.K., and that it added 2 million of those clients in 2023 alone. The company also has 400,000 business banking customers.