Whereas many entrepreneurs are at the moment going through the tough actuality of a VC funding crunch, Qonto isn’t certainly one of them. The Paris-based enterprise banking startup nonetheless has a whole lot of hundreds of thousands of money readily available. And it’s utilizing an undisclosed portion of its money reserve to amass Regate, an accounting and monetary automation platform.
Qonto initially began with on-line enterprise accounts with debit playing cards particularly tailor-made for small and medium companies. Over time, the corporate expanded its product providing to incorporate invoicing instruments, options to handle bills and loads of integrations with the fintech ecosystem to facilitate bookkeeping, fee reconciliation, and many others.
And that trendy tackle enterprise banking has labored surprisingly nicely as greater than 450,000 corporations now have a Qonto account. Whereas France stays Qonto’s predominant market, the corporate additionally acquired its German competitor Penta — and moved Penta’s clients to its personal platform — and can also be out there in Italy and Spain.
In 2022, close to the height of the funding frenzy of 2021 and 2022, the corporate raised an enormous €486 million Series D funding round (that’s $529 million at right now’s alternate fee). Now, Qonto needs to ship on its authentic imaginative and prescient of constructing an all-in-one finance answer for small and medium companies.
As a part of this imaginative and prescient, Qonto is buying Regate, a French startup we covered after it raised a €20 million Sequence A spherical ($22 million at right now’s alternate fee). Regate is an accounting automation software-as-a-service startup.
It integrates instantly with current accounting software program platforms like Sage, Cegid and ACD in order that Regate can concentrate on monetary automation. Regate clients can simply monitor incoming funds, schedule funds to suppliers, kind by invoices and receipts, and even entry their financial institution accounts from Regate’s interface.
Since 2020, Regate managed to draw 10,000 purchasers — 6,000 of them are already Qonto clients. The corporate additionally sells its product to accounting companies instantly with 500 companies utilizing Regate.
It’s a distinct go-to-market technique and product philosophy in comparison with Pennylane, a newly minted French unicorn that desires to interchange legacy accounting software program fully. Pennylane itself now additionally gives enterprise financial institution accounts and shifting into Qonto’s predominant product territory.
“We have grown our revenue by 3x in 2023,” Regate co-founder Laura Pallier informed TechCrunch. However when Qonto approached Regate, they determined to promote the corporate to achieve the following stage. “We had a rather intense discussion on the subject . . . We’re convinced that the cockpit approach — with a tool that works for both SMEs and their accountants — makes a lot more sense than multiple products.”
With right now’s acquisition, Regate’s group of 100 workers will all be a part of Qonto’s present 1,400-people employees below a brand new enterprise unit centered on monetary instruments for accountants. At first, there shall be new integrations between each platforms.
After some time, Regate shall be built-in in Qonto instantly to enhance a number of accounting automation options of Qonto, equivalent to invoicing, accounts payables, accounts receivables, and many others. As for accounting companies, they’ll additionally act as a brand new gross sales channel for Qonto.
“The idea is that these two platforms will gradually become one. But it’s going to be a gradual process, and we’ll always be very careful to maintain the customer experience for both corporate clients and accounting firms,” Pallier mentioned.
Extra acquisitions sooner or later
Whereas Regate’s acquisition is barely the second acquisition in Qonto’s historical past, it’s almost definitely not the final one. Partly as a result of its executives are pleased with how Penta’s integration went, but in addition due to its present alternative window.
“We happen to have a planetary alignment. It would be a professional mistake not to look [at potential acquisitions]. We’re not the best at everything. So we should also stay humble and work with experts in their respective fields,” Qonto co-founder and president Steve Anavi informed TechCrunch at Cellular World Congress in Barcelona final week.
“We have an in-house team that looks at opportunities. In the best-case scenario, we sign a deal. But even in the worst-case scenario, we can become partners because we’ve learned to know each other a little bit better over a very short process,” he added.
Qonto finds itself in a distinct place from Payfit, one other French unicorn (or former unicorn) that gives a software-as-a-service software centered on payroll. Yesterday, Les Échos reported that Payfit plans to put off 14% of the corporate, or 110 workers.
Why are issues wanting higher for Qonto? “We have a healthy business model. It means that when we acquire a customer, after a few months it’s a profitable customer. This is mainly because they pay — we don’t have any free offering. So, compared to a lot of fintech companies or startups in general that have a free offering and then try to upsell customers, we haven’t made that choice,” Qonto co-founder and CEO Alexandre Prot informed TechCrunch.
“The second element is that we raised a very large amount of money two years ago. And we were a bit lucky because the timing was right,” he added. Lastly, rising rates of interest have additionally created a brand new income stream for the corporate. And given Qonto’s scale, the corporate is dealing with very massive sums of cash on behalf of its clients.
For these causes, Qonto has loads of money to spend on acquisitions. As many fintech startups are struggling to lift a brand new funding spherical, Qonto may change into a consolidator within the area. And we is likely to be in the beginning of this consolidation part.
