Monzo wins $113 million funding from Y Combinator Continuity, VCs

UK challenger bank Monzo has raised $113 million in fresh funding to take the company's valuation to $2 billion.

The bulk of the funding comes from Silicon Valley fund Y Combinator Continuity and another new investor, Latitude.

Monzo will use the funding to help its expansion into the US and develop its other products including marketplace.

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Challenger banking continues to boom in the UK with another monster funding round for a British fintech.

Neo-bank Monzo secured $113 million in Series F funding from a series of existing and new investors including Y Combinator Continuity to jump to a valuation of $2 billion. Monzo, founded in 2015, gained its unicorn valuation last October in its previous funding round, and has since added more than a million customers.

Y Combinator Continuity backs the subsequent funding rounds of alumni companies of the seed accelerator Y Combinator. Other investors in the Monzo round included General Catalyst, Stripe, Passion Capital, Thrive, Goodwater, Accel and Orange Digital Ventures. Monzo has now secured a total of £324.7 million ($414.5 million) in funding.

“Banking is archaic and needs to be drastically redesigned,” according to Anu Hariharan, a partner at Y Combinator Continuity, said in a release. “Monzo is the first of its kind to redefine the modern banking experience.” Hariharan was previously an investment partner at Andreessen Horowitz, and worked with the management teams of firms including Airbnb, Instacart, and Medium.

Monzo now has more than 2 million customers and has been a key part of the challenger bank fintech space in the UK and Europe, alongside competitors such as Revolut, TransferWise, N26, and Starling. The company also recently launched in the US as it steps up its global expansion plans.

“This wasn't about needing funding but it was a good opportunity to work with investors we respect,” Tristan Thomas, head of marketing and community at Monzo, told Business Insider in an interview. “It's a huge validation for us at a valuation that made sense, and it really reflects how far we've come.”

The company is also launching Monzo marketplace, savings options, energy switching within its account and other services within Monzo Plus.