UK challenger bank Monzo has raised £85m in Series E funding at a £1bn ($1.2bn) valuation.

US VC firms General Catalyst and Accel participated in the round alongside existing shareholders (Passion Capital, Goodwater, Thrive Capital, Orange Digital Ventures and Stripe).

Founded in February 2015, Monzo is well known for its hot coral debit cards.

Monzo co-founder and CEO Tom Blomfield said: “We started Monzo because we wanted to make a positive difference to people’s financial lives. It’s incredible that more than one million people are now using Monzo and a testament to all the hard work that’s gone into building the company over the last three-and-a-half years.

“While we’ve come a long way, we feel we’re still very much at the start of the journey. I’m really excited to be working with two new world-class investors to help bring Monzo to millions more
people.”

Monzo already employs 450 people but is planning to double its headcount to to 900 over the coming 12 months.

The business has 1m customers, with the CEO saying it was signing up 100,000 new customers a month – with 30% of these being based in London.

Adam Valkin, a managing director at General Catalyst, said in a statement that Monzo was “one of the fastest growing consumer financial applications in history”.

He added: “Tom told me four years ago that he wanted to build an entirely new bank for the mobile generation from the ground up. What he and his team have accomplished since then is
impressive — transparent pricing, a customer-centric culture, best-in-class features for social payments and financial planning, and unparalleled customer love.

“In the process, they have become one of the fastest growing consumer financial applications in history with a passionately loyal community of more than 1M customers. Most exciting is that Monzo is just getting started and our team at GC is honoured to be a part of this.”

Eileen Burbidge, partner at Passion Capital, went on to say: “Passion Capital has always believed in the remarkable vision and ambition of the Monzo team, and it’s a privilege to be part of the company journey. This latest fundraising round validates the thesis we’ve always had about the opportunity and market potential for “making money work for everyone” — whether that’s as a bank or a way to transact with friends and contacts or to access other financial services and products.”

Sonali De Rycker, Accel Partner, also commented. She said: “Since launching in 2015, Monzo and their distinctive hot coral cards have become synonymous with community, trust and transparency: it explains why Monzo has been able to grow rapidly to more than 1M accounts across the UK, primarily through word of mouth and customer advocacy. We are thrilled to join the Monzo journey and to be able to help Tom, Jonas and the broader team in their mission to redefine retail banking.”

The startup is also planning to launch a large crowdfunding round later this year.

CityAM previously reported Monzo will seek to raise £20m, Blomfield told Yahoo Finance UK that this was “ballpark right,” but declined to disclose the exact amount.