Digital bank Monese in talks to raise £40m to invest in expansion

Monese put an international expansion on hold last year

British digital bank Monese is in talks over raising £40m in cash this year to resume growth plans after Covid-19 prompted it to rein in an international push last year. 

The Daily Telegraph understands that Monese has begun discussions with investors over the round, which is expected to take place towards the end of the year. Monese is targetting new investors for the cash raise, sources said, although it would also likely feature cash from existing backers.

The funds would partly be used to help Monese resume expansion that had been put on hold last year when the company moved away from proposals to push into six more countries outside Europe and enter the US.

Instead, amid Covid-19 uncertainty, Monese undertook a "significant restructuring" last year, reducing its headcount and closing its Lisbon offices. Ultimately, during the year, it cut costs by 40pc.

As it scaled back plans, Monese decided that, in May, it would not be going ahead with a previously mooted £100m funding round. Instead it raised £26.5m, mostly through convertible and venture debt.

Fresh funding this year could, however, see it restart expansion. 

A spokesman for Monese said the company "continued to monitor the funding environment and is still in the process of finalising any plans".  

It said it had experienced "strong growth" during 2020 — a time when its focus had been on "delivering a more deeper and localised product offering to consumers across existing European markets, as well as strengthening our core technology platform and banking infrastructure".

It is thought that during 2020, Monese experienced stronger demand, with revenue 60pc higher than 2019, when Monese posted £10m in revenue. 

However, like many in the fintech space, Monese has yet to turn a profit, and Companies House filings revealed that, in 2019, losses spiralled to £38m from £13m a year earlier as cash was poured into marketing and staff “to support the company’s anticipated future growth”. 

Prior to raising cash last year, Monese had had £5.2m of cash in hand at the end of 2019. It had said that “additional losses are anticipated as the business continues to grow”.