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Monzo's latest round included £11M in secondary as founding employees partly cash in

Monzo's latest round included £11M in secondary as founding employees partly cash in
From TechCrunch - November 20, 2017

Earlier this month, U.K.-based challenger bank Monzo announced that it had raised a further 71 million in a round led by Goodwater Capital, giving the startup a post-money valuation of 280 million. However, what wasnt reported at the time was that the round included 11 million in secondary investment, meaning that only 60 million entered the companys balance sheet and a number of existing shareholders were permitted to cash in.

TechCrunch understands that a total of 13 early shareholders, made up of Monzo founders and other early employees, sold a portion of their holding, and to varying degrees. This was done partly to enable more new investors to be squeezed into what I understand was an oversubscribed round and without further diluting the company.

In a call with Monzo co-founder and CEO Tom Blomfield, who confirmed the secondary investment, he said it also points to a new formalised arrangement the challenger bank is introducing regards how it plans to let long-term employees sell shares in future.

Specifically, the new policy being introduced will mean that in any future investment rounds, employees who have been with Monzo for three years or more will have the opportunity to sell up to 10 per cent of their options, provided there is demand for those shares from new investors.

The thinking here, he says, is an attempt to solve a particularly European startup problem in which current and prospective employees dont always know how to value stock options as part of an overall compensation package, and are rightly skeptical about how long it will take to cash in, even if they believe the chances of an eventual successful exit are reasonable.

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