Monzo - £1.5bn. Really?

Hats off to Monzo. They have joined or are about to join, the hallowed ranks of the Unicorn. The unicorn is a mythical creature that no one has ever seen.

Caveat - like Brewdog, Monzo was a big name before it came to Crowdcube. Investment at the £30m valuation in 2016, was a no brainer. The company has done pretty well since and this current round for £150m is certainly looking good. 

I wasnt going to write anything about Monzo's latest funding round for £150m, which if it completes, will place them well into Unicorn territory. But some goading from a Twitter follower who thinks he's rich, has stimulated the juices.

As anyone with their head facing the right way, knows, this and all of these 'valuations' are completely spurious - apart from as a gauge as to how crazy the world has gone. Monzo shares - the ones this twit has bought (£5k's worth from all three Crowdcube rounds) are worthless today. There is not market to trade them. There may be one soon but as of today there isnt. So he cant realise that £50k he is sitting on. He might be able to do a private deal for say £10k.

With very strong headwinds heading this way in fronts that none has ever witnessed before, 2019 will be a true test of the Monzo value. We have all seen how increasing valuations mean nothing - just look at Sugru. 

My best guess is that Monzo will be worth much more than the £30m when it first appeared on Crowdcube. How much more is a pure guess. I doubt it will be £1.5bn. What would it take for sizable numbers of their current 800k plus users to emigrate to Revolut or perhaps a new player not yet visible? A technical glitch or some small hacking scandal? Not much. Evidence is that only a fifth of the company's users place their salaries with with it - although this is growing. It seems like a pretty sandy foundation for £1.5bn. Current losses running at £33m mean new money will almost certainly be required. Like Deliveroo and Revolut, the Monzo Unicorn isnt fussed about profits - customer acquisition is the game. But at some stage it will have to be. Then of course there is always the rise of the established banks, who are just now waking from their techphobia slumbers. Most of them already have the numbers and the profits. Image is their problem. The race is on. 

What the twit was also trying to say was that this mitigates all of Crowdcube's failures. Really? It would certainly go someway to removing the losses - the investment in Monzo via Crowdcube is worth ~£4.2m and this is now 'worth' £84m or roughly a years worth of Crowdcube investment at the current rate. But the losses to date are not the point  - as we have consistently stated. It's the number of zombies that matters plus the closed companies. Closed companies are around the 60-70 in number but add in the zombies and that number flies to around 200 plus. That loss when it materialises, will sink the as yet fictional Monzo uplift.