Startuprad.io - The Authority on GSA Startups
Startuprad.io - The Authority on GSA Startups

Episode 336 · 2 months ago

Learn How French Fintech Unicorn Qonto Wants to Conquer the German Market

ABOUT THIS EPISODE

Executive Summary

French neobank unicorn Qonto announced their 486 m Euros in Series D funding at 4.4 bn Euro valuation in January 2022, with a global Who-is-Who of investors. 100 m Euros of this record funding will go into their expansion in the German market, competing with Penta, N26, Holvi, or Deutsche Bank’s Fyrst. So we talked to Torben Rabe Qonto’s Country Director for Germany about how they want to compete and reach their goal of 1 million customers by 2025.

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Learn more and find all links and show notes here: https://medium.com/@startuprad_io/learn-how-french-fintech-unicorn-qonto-wants-to-conquer-the-german-market-fdab1f1d3aa4

Welcome to start up bread dot IO, your podcast and Youtube blog covering the German startup scene with News, interviews and live EFTS. Hello and welcome everybody. This is still from startup rate do io. Welcome to another interview in Startup Rate Dot I, Awe, the authority on German startups. Today I would like to workome urban, who has also been in Spain for some time, but we'll soon get to the story. Hey, hi, you do in? Hi, Joe, I'm doing really well. Thanks for inviting me. Totally my pleasure. We've been messing around a little bit in Spanish, so I thought I'll show up of the Spanish remember, and that's it. So you are here today for a very interesting reason, because you are the your official title is country director, right, country director Germany, of contour, which is spelled q o n t o Um, German pronunciation of a current account, of of a bank account, control and Um, of this company, which is actually headquartered in France. But you guys made a fundraising we also covered in our news, and actually you shared those news and that's why we got into contact. Thank you very much for that. You made four hundred eighty six million years in a series deep, of which one million years will go to the German market expansion, and so far our state you focus is sm ees, freelancers, startups with a strong focus on customer satisfaction. So far, so good, so far, so good, perfect, awesome. So let's dive a little bit in who you are what you did. I see you've gotten around quite a little bit. You've been to Madrid, you've been to Mannheim and you've been to Paris studying. How was it there and how is the food? The food in all locations was amazing, to be honest. So that's true. I've been been around Europe for my studies. Um, I also want to went to India for quite some time. Um, but I really enjoyed all of all of the locations. But I have to say the best food, UM, well, probably in Berlin, where I'm right now, because you have the best food from all over the world in one city. Yeah, it's very international there. I would be curious where have you've been in India and how was it, because I've seen you've been there for Audi, the big car company. That's exactly right. So it was between my Undergrad and my master degree and I really wanted to just see a different part of the world and India was one place which always fascinated me. I wanted to go somewhere completely different and India was definitely...

...the place where it's very different as soon as you get there, and it was an amazing experience. I spent half a year there. Um, met amazing people and had amazing food as well. I think I've never eaten that well in my life. Um. And Yeah, I was in Mumbai during came in. The first day I came there it was the start of monsoon season, so it rained for three months. But even even despite that, I really enjoyed my time there. Um, I would always go for about the chicken. What was your favorite dish? It was that it changed over time. So at the beginning it was chicken comma, and then all my time I really enjoyed palact Panier, but really all of the dishes are really amazing and you get used to the spiciness as well. Um, and spiciness in the sense of being hot, but also the different spices that you see there. And then you don't normally taste in European cuisine exactly. And now we've taken our daily detour. Let's go a little little bit into what you did in business terms. I've seen you had stops at rocket Internet, Um, a consultancy called Oliver Wyman and very interesting for a lot of people interested in startups, bird the company. Can you tell us a little bit about what you did there and maybe a little bit hinting and what you've learned there? That's exactly right. So after my studies, I studied finance at actually say in Paris and business school, where I focused on financial topics, and during that time I already had a lecture together with Oliver Wyman which was focused on Fintech, and I even had some experience in Fintech before at rocket Internet um at Lennico back in the day. I think it was there very we were a very small team at the time but scaled relatively fast during that time. I think within six months we were at over on people and in five markets, which was crazy, crazy speed during that time. Um. But started to do my master's in Paris, always had this fintech idea in mind, but I really wanted to learn finance from the ground up and that's why I joined Oliver wignment and I wanted to advise traditional banks, traditional insurances on their digital efforts, and that's exactly what I did. You can approach it from different angles. You can do it Greenfield, basically from the clean slate. You can try to digitalize your existing offering all, you can buy different players, and that's all of that I experienced over time Um but during some of these projects I realized, Hey, it's really fun to build something, especially one project which was fairly long for consulting terms. We build a B to c length for an existing traditional bank in London and I realized, Hey, it's really fun also to stay there and to see what you're building and to see this success of it. And that's why I decided to go back to the startup life. And at that time Um bird came up as an...

...opportunity. For those who might not know what it is, but it is an American micro mobility company. They offer scooters, I think now even e bikes and so on to share. They were actually the first ones that started the scooter hype and revolution, if if you want to say. And I was interested for two reasons. One was I really like the scootest when I first saw them in Madrid, and I really liked riding with them, but also at the point in time it was before we entered the German market and the Austrian market, and my role was to enter and prepare the go to market in southern Germany and Austria, which was really, really fun. But after after one year, I realized okay, UM, the go to market is done and I'm still interested in Fintech topics and that's why I'm here at console and I'm really happy to be on board. M H I C C. When I look a little bit further into your profile, it gets very interesting because in control um you raised, you guys, like the whole company, French and German party, raised six hundred and twenty two million. I assume that everything, including the series D we just talked about, and I found some very interesting investors like a val adventures, Peter Teal European Investment Bank can send, also known to our audience, as well as thet global and tiger global t c v. and what I found interesting was also KK R and inside partners, especially KKR, because they normally a private equity house, taking companies off the Stock Exchange restructuring them. Yeah, exactly. We've got a variety of investors, some of them. Well, actually most of them are invested that have been with us for quite a long time. If you look at Alvin, you look at Beila Adventures, tencent, they participated in previous rounds as well. So we grew with them over time, UM, and we're really happy to have them as investors and in our recent funding, obviously due to the size as well. At some point there's more growth, Growth Equity Funds that are interested in these kind of investments because your company gets a little bit more stable, the cash flows get more predictable, the growth gets more predictable and that's when those players enter. Um, he said they've been with us for a long time. How long have we been with CONTO and what was her role there so far? Well, I joined in two thousand twenty, when we were already operating actually in the German market. Um, maybe maybe to go back a limit. Um. So what what Conto does and what what what we're doing, because I think it's important for the story as well. So condy is. CONDO is the leading European business finance solution. And what really the only thing that you need to know is that...

...we want to help as an ease of small, medium sized enterprises, startups freelances to protect their most valuable resources, which is time, energy and focus. Our two founders, Alex and Steve, they founded their own company before, which had nothing to do with Inin Tech. It was had something to do with the cigarettes back in the day. But they realized that business banking back in the day was really broken. It took a long time to get feedback from their account manager when they wanted to send something in US dollar Um. It was really not a great experience that you would be used to in the B two C space Um. So they were looking for something else and they went on to build down and that's exactly what we're doing. was simplifying everything from everyday banking and financing to bookkeeping and spend management, and the goal is really for you to focus on what matters, creating the value for your customer. Have to head space to do that and don't worry about the finance management behind it. That's what we're doing. And maybe a little bit more about me. So I joined in two thousand and twenty when we were already launched in the German market. We started out with a small team from Paris um in the German market. Of course, the German speakers, but based, based in Paris then with I would say minimum Bible Product. Back then we started with a French Ivan Um in the German market, which was an interesting learning as well. We realized, okay, on paper it shouldn't really make a difference, Um, whether you have a French Ivan or a German Ivan, but de facto, Um, they exist. The Ivan Discrimination in Europe and we realized that could we need to change it. It's also made us realize, okay, trust in Germany is a major thing. So German customers tend to trust you a little bit later then in the markets maybe, but you need to bridge that trust and that's what we've been doing for quite some time. So we launched the German Ivan relatively quickly, I think within three months. We've been there. With the German Ivan Um, we managed to integrate a lot of different software providers solutions that German customers use most, namely data for example. We partnered with Raisin Um, which some up um with some of the some of the products that people used for their for their day to day banking and for their finance management. Um, and we also over time Um kind of Um. Yeah, I think in September two thousand twenty, we won the Fintech Germany award from the best market entry, uh, and then continued from there. So what we're doing now in Germany is really offer the everyday banking on the one side. So we've got the German Ivan, we've got the physical and virtual master card payment methods. Of course, like the everyday banking, needs to needs to work. But then we're...

...offering the simplified accounting, so you can scan receipts, you can sink it with data and so on. You can organize your teams in it, UH and power your employees to Um spent with the cards did you give them? Maybe virtual cards, and you can integrate with your favorite bookkeeping solution, cheft, desk, Fast Bill, you name it. And that's what we're doing in the German market. That sounds pretty interesting. We may take a few steps back because that everybody listening here is a thin tech Geek. So first up, I'm very sure Renie from from fast bill would love this statement. He's been also in one of our ATV guests, you're Um, with his exit to the Canadian Unicorn. Um. We're talking about an I band which is an international bank account number. And you talked about a French and German I ban, and that's basically like the first two letters they designate the country, like D for Germany. Then there two numbers that don't designates the city. Well, with a little bit more, and then there's the count numbers. So basically, if you have one whole I band, it should, in theory, be possible to send money to this account from all over the world with any problems, as I said, in theory. Um, you talked about that have, which is basically Um, the main format, the main provider to exchange accounting data around here with with the tax authorities and stuff like that. And you talked about raising. Now, raising the S, which is a broker for fixed for Um depicits, like for exactly deposit savings, exactly Um. And of course we will also link the interview with any and too much the found of raising down here in the show notes. You'll find them there. Now that we get that out of the way, where are my notes? What else I want to talk about with you? Oh, there is a lot to talk because you, with contour, are present in a lot of countries, but a little bird, namely Europel Lady told me Germany. What's your fastest growing market? Right, that's exactly right. So we not only won the two synthic Germany want from the best market entry, but we're really shown over two thousand twenty one that we can build the trust with the German customers and it was in fact our fastest growing market. We grew by two point seven x our customer base in Germany over there year, which is really I was really happy about it. And this year we're doubling down on Germany. So, Um, we're operating in four countries. Um, we started out in France. Were now in four European countries.

So it's France, Germany, Italy and Spain, and we pretty much launched all the international markets at the same time. So end of two thousand nineteen, beginning of two thousand and twenty, who launched in Italy, Spain and Germany. And during that time it was interesting to see the differences between the different European markets. I think it's also interesting for maybe some of the listed news who aren't that familiar with the European markets. Some people think about the European market as just one but it's really it's really different between the market, especially if you are a thin tech companies, that you of course have some compliance that you need to apply to, but you also need to think about the different market dynamics and what we see, for example, in Spain, there's a lot more um market development, that you need to do more customer education. You also in Spain have very strong traditional banks like there are or B D v a Um, which is very active in Latin America with their digital offerings. So they have quite a strong digital offering. You've got Italy, on the other hand, which is um well, more of the clean slate in terms of the competitive landscape, but you still need to have a big offline market as well, so you need to pull more customers into the online world. And then you've got Germany, where the customers are more a custom I would say, to digital offerings, even though maybe the prejudices that German companies or Germans are a little bit slower in the adoption of digital offerings. I would say in the B two B space they're quite open if you can show them the benefit. On the other hand, you have also competitors in the German market. So Um, that's kind of the trade off in that sense. But we like we like competition in that sense because you can see, you can see the product market fit of your solution and you can see that if there are competitors which are somehow similar to what you're doing, then you can see that there are. It is indeed the market. So that's a good thing and we ultimately just want to serve the customers with the best service. So it helps us improving our service as well. MM HMMM. I've also found out that one third all the clients are already startups. So Um, as you said, there is UM. It's easier to explain Um, for example, somebody who would not now start a rat Oh. I could tell them I'm doing the same as this week in startups for Germany, just better, and you can do the same right exactly. So one third, one one third of our customers are founders in Germany and it's roughly in the same in France. We're helping founders in both countries and it's really something that German founders are surprised by. When you create your capital company in...

Germany you need a business bank account to pay in your capital deposit and it's the step in the process where most people are surprised by how long it takes. So either a traditional bank doesn't accept you when you want to open a business bank account or it takes weeks to create it. And we are contour just like in our traditional offering Um, we do online. On Digital Um, you can create an account within ten minutes and then we'll set you up to be ready for the trade riverstry within seventy two hours. So that's our that's our promise, and we want to basically help the founders in Germany to be faster at the company creation and make it as seamless Um and as quick as they needed to be an as they expected also to be, and I think that's really needed in Germany as well. Um We have a good start a found link rates in the percentage basically of Um, the start start off companies in in Germany, which has, over the last decade or two, decreased Um all the time, and we really need to move the needle here and create more companies, more innovative ideas in Germany and in Europe to protect our wealth as well as a European society. When you've been talking about doing it all digital, focusing on founders, of course, what came to mind with in twenty six. They are not necessarily a business company, but they'll do some competition, especially in terms of freelancers. For you all, v Panta, which we had pretty frequently in the interview from the very start, and Deutsche banks, competitor first. They all come to mind. What would you say? Are you different? Because, especially when you see the fundings of end twenty six, like the last funding, nine hundred million, you as dollars Um. If you want to be that with one million years dollars, you either have to be very good or very different. Well, first of all, Um, congrats to them. We're we're happy, happy for them. I think what sets US apart at control is our pure B two B focused, so we're focused on small medium sized enterprises, freelancers, startups, founders. Only we don't do B two CS, and that's the first difference there. But the three main things that set us apart is, on the one hand, our product, so we build our own core banking system Um, which really allows us to have a very reliable, very fast service without any interruptions and so on, and it allows us to build features very fast. So many Fintachs for those who might not know a lot of the fintechs, but many fintachs basically plug into an existing core banking system and build their service around it. What we're doing, and there was a strategic decision,...

...was to build our own core banking system and use that as a strong base, um to also offer what we're offering now, spend management solutions with cards, virtual virtual cards, flash cards that you can set with an expiry date very flexibly, those kind of things we wouldn't be able to do we didn't have our own core banking system. So that's the first part product. The second part really is customer service. So we have seven days a week um customer service by email, chat telephone, and that's especially important in the German market, but also in the on the European market markets, to have basically a good and excellent customers support. We've seen that in the ratings, for example, on trust pilot, on the APP store, on the Google play store, Um, to really Um make sure that our customers have with us and trust us as well. And then the third point is the pricing. So we offer a fair and transparent pricing. Um, we separate between the Solo companies which use the bank account only for themselves and the team plans, which means that companies use it for their employees as well, Um and to give them different worlds and so on. Our philosophy is we don't want to offer a free account. We want to offer Um no hidden fees and we want to be very transparent about it, and that's why we offered it this way and that's what sets us a private would say. And as far as I know, you surpassed a quarter of million, meaning two hundred and fifty thousand accounts, in of April, exactly two and a fifty Tho business customers which trust US um in in all of the markets, and so we're really, really happy about that. The elopment, I think at the at the end of last year was one on the twenty thousand, so we grew significantly over that period of time. And Yeah, our goal is until two thousand twenty five to reach one million customers in Europe. And if you look at the European landscape, there are roughly twenty five million sames in Europe. With the four markets that we have right now we're covering fifteen million of them. So it's a huge market and many of them, of course, are served by traditional banks and we want to convince them that our solution offers them the best service that they can get. M H, I've also seen that you guys had a crop funding campaign, with the clients also bringing in additional five million Um. When you make such a lot of funding, you don't need that crowdfunding. So what was the trigger for that? It's a good question, Um. I think first of all, it wasn't really about the...

...money, of the five million. It's, of course, really, really good to have it, but the main idea here was to strengthen our community of customers. So the crowd investing round was only open for our customers and we wanted to build a network of our customers who really believe in our product and want to trust and want to engage with us in a in a different way. And there was the starting point where we said, okay, let's plan for a crowd investing round, and we did that even during our series the while we were talking to investors. So our investors back then knew, Um, that this was coming and we wanted to basically build a community of our investadors who are also investors. And if I think about my stocks, that the companies that I'm invested in through stocks. I'm really interested in what they're doing and how they're doing. I read the news about them. I'm a much more engaged. I feel closer to that company. We wanted to create that feeling as well and, on the other hand, we wanted to use the community Um too kind of have the dialogue together that were around about one eight hundred customers who invested during for the for this five million, and those customers are loyal customers. They believe in our company, in our product and in our future, and we want to build the next features with them as well. So we want to engage the more. We want to ask them for feedback, and that was the main idea. And, by the way, we are the only scale up who managed to do this and who wanted to try it on that scale. Usually you hear about crowdfunding, crowd investing more at an earlier stage, but we we really wanted to do it for a different reason and we're really happy with the results and now we're starting to engage with it, with this community of our investors. M M, that sounds pretty good. So you're more about customer satisfaction like more a real community then just offering good banking services. I would like to pick your brain a little bit for those thousands of people listening to this from abroad, because you guys had to localize a German version from a different product. Admittedly, the French culture is not so much different, right. They also love bread, they also drive on the right side of the road and then they also log football. For the Americans, that's the real soccer, the real football, um. But did you find any differences, like big, big things you had to learn to realize as a German? Oh yeah, that's different for us. Well, first of all, we decided to launch in those three additional markets because there are similarly and because they are the biggest other markets...

...in Europe. That was the rationale for Germany, Spain in Italy. But of course there are cultural differences and I think if you want to launch in Germany, I would say it really depends in terms of localization what kind of product or service you're offering. Um. So it could be that with your e commerce solution you might be able to have fairly little localization effort, but in general, what you need to keep in mind for Germany is that credibility and trust is really the most important thing in the German market. So I mentioned that we started with an M v P with the French Iban Um in the in the German market. Um, we we learned from that, but our very first customers were really French German customers at the very beginning, and then some earlier adopters, earlier German adopters, who were curious and they were open to different solutions and we were really wanted to learn and at the beginning the connection to these early adopters was really key, Um, and that was so that was the most important thing at the beginning. I think when we talk about trust, you can also think about bridging that trust. So I would say the role of partnerships you shouldn't underestimate. So really making sure that your local partners Um, that you have a strong local tie to them. Um. It's also a good way to position yourself with these bands together and to expand on those partnerships all the time. Being present in the German market is also very important. So building the community, like I mentioned, having events together, Um is also super important, and just being present in their respective ecosystem. And, by the way, the business landscape. Of course, um it depends on the sectary in but Germany is, of course, much more decentralized than France. For example, in France, much of the headquarters, if you look at the biggest companies, are headquartered in Paris and lots of the economy is based in Paris. Of course you have other cities, like Lyon where there's also an ecosystem, but in Germany you it's very decentralized, depending on what you're working with. If we're talking about s and ease and the Mittish stund in Germany, there's a strong footprint in southern Germany and in the west of Germany. If you're talking about startups, you have Berlin. Of course everyone knows Berlin, and the fintech ecosystem, for example, in Berlin, is still the biggest within the country. But there's also Frankfurt, there's also Hambug, there's also Munich. Maybe Munich a lot for deep tech companies as well, and many of the international tech companies are also based in Munich from the talent and the good universities. So it's much more adversatile, would say, as a market and you need to you need to...

...address that and you need to think about, depending on the service that you're offering, what your go to market approach is in Germany in that sense. So I would say culture on the one hand. So trust really important, to which I trust through partnerships, flagship clients and so on. Of course, also customers, service quality Um to have this vow effect at the beginning, but also considering the differences in the landscape. And, of course, I would also say talent. So Germany is a great place to also attract talent Um. It can be German talent or international people who work in Germany. It's a very it's a very diverse landscape, I would say, in Germany exactly Um before we were already recording for more than thirty minutes by now. I would just want to highlight one point that I found very interesting with you guys, is basically the ideas at one point that he could switch between different accounts, like switching the country and Gmail. That would be something, uh, I actually can feel now a traditional banker from one of the traditional banks here in Germany. They just got a hard to check our stroke just thinking about that. How do you guys make this possible? There's several aspects to it. So I think underneath everything there is the core banking system. So you need to work on that level and then from the from the ground up, I would say, and that's maybe also the difference to a traditional bank, where you have legacy infrastructure and where you need to deal with a lot of different it systems. So we don't have that. That makes it, of course, easier. The second thing is so thinking about it from a customer perspective really helps, of course, when you design the product. So thinking about, okay, what would the customer need? And we, for example, for for think of ourselves as a European company, have thought about that since the very beginning, and our customers are also European or international. So switching between legal entities or maybe different bank accounts, even from one country to the other. So if I'm the CFO and I want to check how my German bank account or my French bank account works, Um, you can just toggle and switch it on the left top hand side, and that's what was something that came came over time, of course, but it really speaks to the idea. And then it should be simple and you shouldn't spend too much time on it. It shouldn't be too UM. It can be technical if you want to, but you it should be as simple and intuitive as it can be and kind of using that analogy from Gmail, which I use every day. I found it very intuitive. So why not? Why not using as well? That is totally to get into the very last section,...

...the outlook, you've been already stating some goals. So what is on the horizon for contour in Germany, as well as taking over the world? What's the plan? We have a lot of plans, but for our I would say from the long term vision is to reach one million European sames and freelancers by two thou so we want to grow and we want to reach more companies and help them. Um, that means for conto several things. So first of all, grow our international footprint further increase the market penetration in the existing markets, so Germany, Italy, in Spain. Our goal there is to have of our new clients outside of France by two and to reinforce our European leadership by launching new markets by two thousand twenty three. The idea here is strengthen and further increase of a print in the existing markets for Orient but also expanding into new ones. Then the second point is on people. So we need to be the best employer that we can be in order to reach our goals and to attract the best talent. And we want to crodruple in size. So we're currently over six hundred people at CONTO and we want to be more than two thousand by two and of our new highs will be based outside of France, which is, of course, also something that will change the dynamic and the internationalization of the company itself. In Germany, we plan to hire one employees by the end of two thousand twenty three, which is quite a lot. Fre currently and over twenty five employees. We want to want to reach that by the end of next year. And there's to do that. We just need to be need to be the most attractive empire where, for example, having a compass Quanto campus program where we're allowing employees to work from our different officers Um in Barcelona, in Paris, in Milano and in Berlin, flexible remote policies, having a very engaging work environment. So those are all things that are kind of a condition for success. And then on the product side, we obviously want to expand our product and ensure our offering is the best product available in the markets. And you can think about it in three ways. So you can build it in the house, which we're certainly doing all the time. You can have new strategic partnerships. Were quite pragmatic about that, in the sense of if someone else offers a better service, will partner with them, will integrate them better for the customer typically, and potential acquisitions are also also on the tin, I see. So...

...you try to do everything and get big fast. So I've taken from the interview that there's no imminent I P O on the cards right now. That's exactly right. So we want to focus on our growth and of course, never say never, but our our journey hasn't hasn't come come to that end yet. So we really want to want to grow and we've raised money and we want to spend it wisely and we want to grow in a smart way in those markets and we see a big potential. Like I said, twenty five million estmes in Europe. It's a huge market and we want to serve them the best way possible. I see, and for everybody who may be interested in Um getting hired by control. You're providing your F for us. You can go down here in the show in the show notes. Wherever you're listening to this or watching through this, there's a link to our medium blog and there you'll find the link to the contour homepage. For every investment banker and spack owner WHO's out there who still thinks that conto should I P up pretty soon, there's also your linked in profileing there right, exactly exactly. So we're looking in different roads. If you're interested in contour, please feel free to reach rain. Thank you very much, with a pleasure, blackwise. Thank you, Joe. Have Good Day. Bye Bye. That's all. Fuls. Find more news streams, events and interviews at www. Let's startup read Dot Hio. Remember, sharing is caring.

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