The bank is close to agreeing a deal that will value it at around £1.25bn, compared with the more than £2bn valuation secured at its most recent funding round last June.
Monzo had hoped to raise money from new investors earlier in the year but the pandemic took hold in March. The majority of its new funding will now be provided by existing investors. Its key backers include US venture capital groups Accel, Y Combinator Continuity and Goodwater Capital, along with UK-based Passion Capital. The expected 40 per cent decline in Monzo’s valuation compares with a 40 per cent drop in the FTSE 350 Banks index since the start of the year, though start-up banks such as Monzo have faced different challenges to their publicly listed peers.