Monese set to make 30 employees into millionaires

Monese, a UK banking app tailored to recent immigrants without local credit histories, is expecting to turn 30 employees into paper millionaires after its next fundraise, which will reportedly value the company at £1bn.

In an interview with Sifted, chief executive Norris Koppel declined to comment on the alleged valuation but said that Monese’s staff equity scheme had already minted over 20 paper millionaires — with several more expected at the next round.

“Everyone working at Monese has employee share options… It’s about giving employees pride of ownership,” says Koppel. He adds that “giving shares was a better way to motivate staff than fear,” giving an insight into the entrepreneur’s managerial strategy as a possible believer of Frederick Herzberg’s two-factor theory.

Read more: Monese becomes UK’s latest fintech unicorn

Elsewhere, the company’s strategy will focus on boosting its presence outside of its UK stronghold.

The neobank, which has had over two million downloads, is far from the only European fintech to have made early employees very affluent (at least on paper).

TransferWise documented 33 paper-millionaires after being valued at $3.5bn in 2019, according to Sifted calculations, and Revolut has already made at least three executives into actual millionaires after they cashed out last October.

Despite having a “pay-to-use” offering, Monese’s financials are on the smaller side. It reported £5.5m in revenue in 2018, which paled against Revolut’s reported revenues of £58.2m for that period. Both companies launched nearly five years ago.

Unlike most of its peers, Monese also already has a direct-revenue stream, with 46% of Monese’s active UK customers paying for its premium offering in return for Avios points among other perks.

See also: TransferWise doubles its valuation to $3.5bn

Users also trust it: 72% pay their “salaries” into Monese as their primary overseas account (in comparison, only a third of Monzo’s customers do).

“We earn more money per active customer than we spend on having this customer. This is across all our pricing packages including the free Simple package,” Koppel notes.

The company has raised $100m to-date compared to N26’s $680m and Revolut’s $837m.

To boost its revenue stream, Monese will soon allow UK customers to apply for credit. The offering is expected imminently, Sifted reports.

With its average UK customer aged 18-24 and earning £30k a year, Monese will have a strong lending audience.

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The CEO notes that its interest rate on loans could be anywhere up to 39%. This surprisingly high rate may be down to Monese not being a bank but rather an e-money institution, meaning they’ll need to leverage (or acquire) a third-party to provide loans at an added cost.

Elsewhere, the company’s strategy will focus on boosting its presence outside of its UK stronghold (where 50% of its users are based). Koppel says they’ve ruled out Africa but hinted at potential expansion to the US or Australia, noting they’d “mapped them out closely”, and saw benefits to following the likes of Revolut into battle.

Monese’s rating could eventually suffer the same fate of its peers when it enters hyper-growth mode; for instance, Starling dropped from 4.67 in February 2019 to 3.7 on the day of publication.