Monzo has closed a £60 million funding round at a £1.25 billion valuation — a 40 per cent valuation drop from its previous fundraise.

The digital challenger bank confirmed the speculated fall in valuation, amid recent redundancies and growth challenges during the Coronavirus crisis.

Business Insider reported two new investors in the new round, Swiss fund Reference Capital and Vanderbilt University, with the remaining investing coming from existing investors, including Y Combinator, Accel, Thrive Capital and Passion Capital.

The money will help stabilise Monzo’s balance sheet, which now stands at £175 million in liquid capital.

A smaller tranche of the fundraise is expected to close in the coming months – as the overall fundraise was originally expected to be around $130 million.

Commenting on the move, 11:FS head of analysis and research manager Sarah Kocianski stated: "The company had restructured to meet current and likely future circumstances, which will almost certainly mean slower growth - largely through no fault of its own - that probably gave investors more confidence that what they were putting into it was a better bet.

“Regarding the revised valuation, it's a different company in a different environment to the middle of last year, surely a revised valuation is therefore sensible,” she continued, adding: “It still managed to raise money, which is no mean feat, and it might yet get another £40 million towards the end of the year."

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