Monzo founder and ex-CEO Tom Blomfield has claimed that a SoftBank executive picked his feet and smoked during meetings while Blomfield was pitching for funds to get Monzo off the ground. The former challenger bank chief is carving out a new niche for himself as an angel investor.
After a particularly challenging year that saw Monzo’s valuation slashed by 40% to £1.24bn and net losses of £113.8m, Blomfield stepped down as CEO in January, citing mental health issues.
Since leaving the digital bank, Blomfield has pivoted away from personally spearheading startups to supporting them as an angel investor. He’s already invested in the likes of UK dating app Thursday, payroll startup Pento and activist shareholder investment platform Tulipshare.
As part of his new career, Blomfield posted a new blog over the weekend to give budding entrepreneurs tips on how to raise capital.
However, the blog didn’t just provide tips about networking, writing term sheets and crowdfunding. It also described outlandish meetings between the Monzo founder and investors at SoftBank.
Blomfield even went as far as claiming that the mighty Japanese-headquartered investor had provided a “particularly egregious example of bad behaviour”.
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The former Monzo CEO said he’d pitched SoftBank “multiple times” to invest in the challenger bank.
While claiming that there were “no hard feelings” following the rejections, Blomfield noted that “it seemed like standard practice during my visits to the London office to make me wait in the lobby, often for an hour or more after the meeting was supposed to start”.
The Monzo founder claimed SoftBank had behaved the same way to other entrepreneurs too, saying he’d heard about “one founder who’d flown in from another country and was made to wait for the entire day in their lobby.”
“Their behaviour during pitches was worse,” Blomfield alleged. “The lead partner took meetings barefoot, and would pick his feet incessantly. During one meeting, he lit a cigarette and smoked it in his office, windows closed. He finally put [it] down in his lunch plate, and poured his coffee over the cigarette to extinguish it.
“I didn’t know if it was some weird power play, or if he just lacked any kind of manners. Looking back, I wish I had the guts to ask him to stop, or to simply get up and walk out of his office. But my company really needed the investment and I didn’t want to blow my chance.”
Blomfield declined to answer Verdict’s questions about the identity of the investor he claimed had behaved in this manner.
SoftBank did not return requests to comment on the allegations.
Neobanks spearhead the fintech boom
Despite Monzo having had its fair share of setbacks since the onset of the pandemic, it’s still a major feature of the UK’s fintech ecosystem.
The same can be said of its direct rival Revolut, which raised a $800m funding round that pushed its valuation past the $33bn mark in July. The funding raise theoretically made it more valuable than traditional UK bank NatWest, which currently trades at a $32.9bn market cap.
Neobanks are not confined to the UK. Similar challenger banks have been launched all over the world. Germany has N26, the Netherlands has birthed the likes of bunq, Brazil has NuBank, South Korea has Kakaobank, Denmark has Lunar Bank and Chime reigns supreme in the States.
Their digital-first offering has marked a shift in the market as millions of users around the world have signed up to their services.
“Digital-only banks are increasingly the preferred route for banking, predominantly among millennials because of their strong attachment to smart devices,” a recent GlobalData thematic research report noted. “These banks are 100% cloud-powered and offer banking exclusively through digital platforms such as mobiles, tablets and the web.”
The success of these companies have encouraged more traditional lenders to update their own offering with new digital services to better compete with the startups in the sector.
These attempts have not always worked out. The Royal Bank of Scotland (RBS), for instance, launched its own neobank app Bo at the end of 2019 to compete with the new breed of challenger banks. The press even referred to it as a prospective “Monzo killer”.
However, Bo soon became haunted by a string of setbacks, including accusations of posting fake reviews and having to reissue 6,000 debit cards as the old ones weren’t compliant with EU rules.
In May 2020, RBS announced that it would shut down Bo and integrate it into the bank’s other app, Mettle.