I hope you all are staying home and keeping well!
I have been looking at how challenger banks, Revolut and Monzo raised initial capital, and the crowdfunding site crowdcube.com is common to both of them. Revolut raised over GBP 1M in 2016, when it was valued at GBP 42M, now it is valued at GBP 1.2BN, making a ~19x return for their crowd-investors.
Monzo, on the other hand, raised multiple rounds through the crowdfunding platform (GBP 23M over three rounds). Their post-money valuation is now GBP 2BN, and they have created a crowdfunding return of 25x (on paper, until its IPO)! Monzo is billed as the fastest-growing challenger bank in the UK with over 2 Million customers.
What are the other attributes that these Neo-banks have in common? Both of them do not have any physical branch, offer great UX to their customers, have low to nil fees, and are positioned as personal financial advisors to their customers.
The question to ask is, why did these digital banks go in for crowdfunding initially?
Because they want to use the social power of the investors- that's why. The investors become the banks' early customers and their most influential promoters, and of course, their harshest critics in private but tolerant of failures in public. Great to have customers who are co-invested in your success, right?
