The French fintech primarily wants to win over freelancers and medium-sized companies as customers.
(Photo: Alexis Leclercq Photographie / Qonto)
Berlin After a successful round of capital, the French banking start-up Qonto has set itself an ambitious goal: “By 2025, we want to be the preferred financial solution for a million small and medium-sized corporate customers as well as start-ups and freelancers in Europe,” said Qonto’s head of Germany , Torben Rabe, the Handelsblatt.
The digital SME financier, founded by Alexandre Prot and Steve Anavi in Paris in 2017, raised 486 million euros from investors, bringing the total funding to 622 million euros so far.
Thanks to the engagement of new investors such as Tiger Global, TCV, Alkeon, Eurazeo, KKR, Insight Partners and Exor Seeds, the company comes to a valuation of 4.4 billion euros. For comparison: the leading German fintech, the Berlin smartphone bank N26, came to a valuation of around nine billion euros after the latest financing round last October. Existing Qonto investors include Valar, the fund of Peter Thiel, Alven, DST Global and Tencent.
While neo-banks such as N26 or Revolut are primarily targeting private customers, Qonto is aimed exclusively at small and medium-sized companies and the self-employed. In addition to the actual bank account, Qonto’s service also includes services such as the digitization of receipts for accounting and interfaces to external companies such as Datev, Stripe or Weltsparen.
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Qonto competes with traditional banks, but also with start-ups such as the Finleap subsidiary Penta, Moss, Holvi, Kontist, Finom, but also the Deutsche Bank subsidiary Fyrst.
No digital bank with a focus on business customers is currently rated higher in Europe. At best, the Danish fintech Pleo, which also advertises company cards and accounting software in Germany, has a billion valuation in this segment.
Competition for medium-sized companies
The providers in Germany are likely to follow the capital round with great interest. After all, there are many digital providers on the move who offer their services to around 3.5 million medium-sized companies in Germany.
“The neo-banks for business customers have clearly filled a gap,” says René Fischer, partner and expert for financial services at strategy consultancy Oliver Wyman. The established banks are dominated by private and corporate customer business. “Founders and self-employed people often fall through the rust because the business is difficult to standardize and is also not profitable.”
Compared to the other digital providers, Qonto has recently grown strongly: “Four years after its launch, we are the only pan-European financial solution with more than 220,000 small and medium-sized corporate customers,” says Germany boss Rabe. In the past two years, the customer base across Europe has quadrupled. France is still the largest market, but “Germany is the fastest growing market for Qonto”, emphasizes Rabe.
In the next two years, Qonto plans to invest around 100 million euros in Germany and employ 100 new employees in Germany by 2023.
Qonto does not give any detailed figures broken down into individual countries such as France, Germany, Spain and Italy, but offers approximate values: By 2025, 75 percent of new customers are to come from countries outside France.
Finleap subsidiary Penta is also growing strongly
The Finleap subsidiary Penta is showing more transparency for its corporate customers. In an earlier interview, CEO Markus Pertlwieser formulated the claim to become the leading digital neo bank for business customers in Germany.
Upon request, it was now said that Penta had grown significantly in the past year. In December, there were more than 40,000 small and medium-sized companies, freelancers and self-employed customers. The last communicated number was 30,000 customers. An increase in the rate of growth is planned for this year.
Similar to Qonto, Penta relies on a platform strategy that provides customers with the best possible account-related services – with the help of partners. For example, Qonto relies on the Iwoca portal for loans and Datev for accounting services.
In addition to Raisin DS, Penta also relies on SWK-Bank for fixed-income investments. Fixed-term deposits can be invested from 10,000 euros to five million euros for up to 0.25 percent for up to 120 months. A credit line is to be offered in the first quarter of 2022 with the help of Solarisbank, and an expansion of the loan offer for Penta customers is to be agreed with a major European bank in the near future, according to a spokesman.
From the perspective of the Oliver Wyman strategists, the financing of their business customers is a crucial question for digital providers. “At the end of the day, smaller companies also need financing. The neo-banks have not yet solved the problem, ”said Fischer. But it has to be solved, since 50 to 70 percent of the total income in this customer segment is from banks.
Malte Gündling, Principal at Oliver Wyman, sees good growth opportunities in sector-specific solutions. “If neo-banks manage to present solutions specially tailored to professional groups, that could accelerate success,” said Gündling.
Investors are clearly confident. In the last round of capital, Penta came to a valuation of around 180 million euros and was thus below the valuation of Moss, which claimed a value of 225 million euros for itself. However, this is a snapshot. Pertlwieser has envisaged a new round of capital for Penta this year. Then the internationalization strategy should also gain momentum. In terms of rating, however, Qonto and Pleo have set high hurdles.
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