Few fintech founders live the problem they then try to solve; even fewer succeed in scaling that solution beyond an idea. Norris Koppel is one of them.
The mission was noble – to provide a seamless and modern banking experience to anyone, anywhere, irrespective of status, class or nationality
The mission was noble – to provide a seamless and modern banking experience to anyone, anywhere, irrespective of status, class or nationality. Possessing a bank account should no longer feel like a privilege and should become easily accessible for all. Millennials were becoming more nomadic and financial services needed to follow suit. What use was your Polish bank account when you were working full time in the UK?
For those fintech nerds amongst us, Monese was actually the first fully mobile current account provider to launch in the UK – some months ahead of “Mondo” (later rechristened Monzo). Like many of the “neobanks” that followed, Monese operated under an Electronic Money licence – allowing it to provide current accounts, debit cards and a customer-centric digital experience whilst avoiding the capital pitfalls of being an authorised bank. However, unlike its peers, Monese focused on a specific demographic – immigrants, expats and gig economy workers. It followed that as this demographic were the most in need of a bank account in their country of work, they would use Monese as their salaried primary account, precipitating stronger engagement and retention metrics.
Neobanking was in vogue as the likes of Revolut, Monzo and N26 burned their way through more than 1bn of capital inside a few short years
But tough times require tough measures
We all knew the funding bubble had to burst but as with all good parties, no-one wanted to be the first to leave. The VC funding market cooled just as Monese entered its Series C fundraise. The company had been pushing aggressive signup growth and had heavily invested in international expansion, resulting in high burn. But tough times require tough measures – as the cash was running out the company made a quick decision to preserve the runway and rapidly bring down the burn by focussing on core markets and improving unit economics, postponing its ambitious expansion plans which led to scaling down its expansion related headcount.
The onset of Covid provided little relief – further cuts, internal bridge financing, board changes, senior executive replacements (and that’s all I am legally permitted to mention!) kept Monese in an extremely challenging position. It would have been the easy for the founder and investors to give up and find an easy way out.
VCs love to claim they add “real value” and have an annoying habit of bragging when things go well (this post is perhaps a sad case in point!) – but a true test of your worth as an investor is when things turn ugly and from experience – times are far tougher than VC or fintech LinkedIn posts imply. Despite following on into A and B rounds, we were never a major threshold shareholder in Monese. Nevertheless our proactive support in times of acute stress, a characteristic Outward lives by, has always been met with recognition and mutual respect by our founders. Norris was no exception. We had form with Monese; having introduced Kinnevik as Series B lead as well as 2 follower investors and key hires into the business.
From little acorns mighty oaks grow...In under a year, Monese has done a 180 turn
From little acorns mighty oaks grow. The Investec deal that led to an oversubscribed Series C round was completed and announced in 2021 and precipitated widespread global interest in Monese’s technology. Meantime a relentless focus on product and user economics has seen a rebound in the B2C business. The combination of B2B and B2C is unique and has been extraordinarily well received by tier 1 clients as Monese is able to demonstrate the functionality of its cutting edge technology within its own consumer app – allowing it to test product development that B2B clients may wish to build out or iterate for themselves.
In under a year, Monese has done a 180 turn. Success has many fathers but the credit should go exclusively to Norris, Atul, Jonas and the entire Monese team for persevering and pushing and then seizing the PaaS opportunity. This week’s announcement that HSBC, a casual introduction we made a year ago, would culminate in a landmark investment and commercial PaaS deal is down to the tenacity, patience and resolve of the Monese leadership.
It could all have turned out so differently and this post would have instead been a post-mortem on what went wrong for another consumer fintech
It could all have turned out so differently and this post would have instead been a post-mortem on what went wrong for another consumer fintech. Venture capital is intrinsically a people business and the relationship you cultivate with your founder(s) is at its core. Like any relationship, personal or business – it is built on mutual trust. With Monese – we backed the management team against the odds and helped them a find way. They in turn trusted us to help them through the most challenging time of their professional lives. The Monese journey has had its disproportionate share of adrenalin and anxiety for those of us involved but today’s announcement is a fitting endorsement for a business, technology and founder that refused to give up. The outcome is a fitting irony – that a business forged out of frustration with big banks is now powering one of the world’s largest bank’s technology platform. Onward and Upward.