Mobile challenger bank Mondo has announced a £6m funding round, £1m of which will be raised by crowdfunding on the CrowdCube website. The remaining £5m will come from venture capital fund Passion Capital, and the money will help the firm get to market.
Co-founder Tom Blomfield told CBR: "We went out to raise actually slightly less, we went out to raise about £4m, and we had so much interest from investors. Passion agreed to take the £5m round but it was important for us to actually reserve £1m of it for our users."
He said it was important to have crowdfunding as part of the round, to allow people away from venture capital to invest in the firm, because "part of the whole philosophy behind Mondo is building something that works for ordinary people."
Blomfield said that "we’re ultimately a bunch of individuals who’ve come together who are frustrated with banking, and thought by focussing more on the customer, on human beings, that we could create something that actually worked. So just being super, super connected to our customers has been part of our philosophy from day one, and so having normal people able to invest in the bank is just sort of an extension of that really."
Passion Capital partner Eileen Burbidge, told CBR that her firm thought "the market opportunity was absolutely massive, and probably one or two orders of magnitude bigger than your typical fintech opportunity, which of course we think is big anyway."
She said that she was excited by Mondo’s development of technology, as opposed to using off-the-shelf solutions deployed by other banks.
The £6m round is the second round of funding Mondo has raised, after a £2m seed funding round in June 2015. Depending on regulatory approval it aims to launch later this year.
The public will able to begin investing in Mondo through Crowdcube on Tuesday 1st March 2016. However, pre-registration is currently available, and those that that register for it will be able to begin investing 24 hours earlier – from 10am GMT on the 29th March 2016.
Blomfield said that the mixed model of funding being pursued by his firm "is the most powerful because you have that professional investor there doing all of the due diligence, agreeing terms, setting valuation, running the board often, you know board representation," while also opening it up to your customers.
"It’s important to have that professional investor there, but I think combining it with an element of crowdfunding gets you the best of both worlds," he said.
Burbidge is equally positive about her firm working alongside crowdfunders, saying she approves of the democratisation of funding.
"In this particular case it absolutely brilliant if retail investors or individuals want to become shareholders in their future bank. I think that makes perfect sense. So for us it’s a great compliment and we’re pleased to be working alongside Crowdcube investors," she said.
Crowdfunding has become increasingly popular with startup firms. The most famous example is the Pebble smartwatch, which smashed its own targets and raised $8m in 17m in February 2015.
Other Passion capital portfolio firms have raised money via crowdfunding, such as job hunting site Adzuna, and mobile advertising platform Adludio. The latter has also received investment via equity crowdfunding platform Seedrs from British tennis star Andy Murray.