Whereas many entrepreneurs are presently dealing with the tough actuality of a VC funding crunch, Qonto isn’t one in all them. The Paris-based enterprise banking startup nonetheless has tons of 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, cost reconciliation, and so forth.
And that fashionable tackle enterprise banking has labored surprisingly properly as greater than 450,000 corporations now have a Qonto account. Whereas France stays Qonto’s essential market, the corporate additionally acquired its German competitor Penta — and moved Penta’s clients to its personal platform — and can also be accessible 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 in the present day’s trade price). Now, Qonto needs to ship on its unique 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 in the present day’s trade price). Regate is an accounting automation software-as-a-service startup.
It integrates immediately with current accounting software program platforms like Sage, Cegid and ACD in order that Regate can deal with monetary automation. Regate clients can simply observe incoming funds, schedule funds to suppliers, type via invoices and receipts, and even entry their financial institution accounts from Regate’s interface.
Since 2020, Regate managed to draw 10,000 shoppers — 6,000 of them are already Qonto clients. The corporate additionally sells its product to accounting corporations immediately with 500 corporations utilizing Regate.
It’s a unique go-to-market technique and product philosophy in comparison with Pennylane, a newly minted French unicorn that wishes to exchange legacy accounting software program solely. Pennylane itself now additionally offers enterprise financial institution accounts and transferring into Qonto’s essential product territory.
“Now we have grown our income 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 degree. “We had a moderately intense dialogue on the topic . . . We’re satisfied that the cockpit strategy — with a device that works for each SMEs and their accountants — makes much more sense than a number of merchandise.”
With in the present day’s acquisition, Regate’s staff of 100 workers will all be part of Qonto’s present 1,400-people employees underneath a brand new enterprise unit targeted on monetary instruments for accountants. At first, there might be new integrations between each platforms.
After some time, Regate might be built-in in Qonto immediately to enhance a number of accounting automation options of Qonto, corresponding to invoicing, accounts payables, accounts receivables, and so forth. As for accounting corporations, they’ll additionally act as a brand new gross sales channel for Qonto.
“The concept is that these two platforms will regularly turn into one. But it surely’s going to be a gradual course of, and we’ll at all times be very cautious to keep up the shopper expertise for each company shoppers and accounting corporations,” Pallier mentioned.
Extra acquisitions sooner or later
Whereas Regate’s acquisition is simply the second acquisition in Qonto’s historical past, it’s most certainly not the final one. Partly as a result of its executives are pleased with how Penta’s integration went, but additionally due to its present alternative window.
“We occur to have a planetary alignment. It could be an expert mistake to not look [at potential acquisitions]. We’re not the most effective at the whole lot. So we must also keep humble and work with specialists of their respective fields,” Qonto co-founder and president Steve Anavi informed TechCrunch at Cellular World Congress in Barcelona final week.
“Now we have an in-house staff that appears at alternatives. Within the best-case situation, we signal a deal. However even within the worst-case situation, we are able to turn into companions as a result of we’ve discovered to know one another a little bit bit higher over a really quick course of,” he added.
Qonto finds itself in a unique place from Payfit, one other French unicorn (or former unicorn) that gives a software-as-a-service device targeted 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? “Now we have a wholesome enterprise mannequin. It implies that after we purchase a buyer, after a number of months it’s a worthwhile buyer. That is primarily as a result of they pay — we don’t have any free providing. So, in comparison with numerous fintech corporations or startups on the whole which have a free providing after which attempt to upsell clients, we haven’t made that selection,” Qonto co-founder and CEO Alexandre Prot informed TechCrunch.
“The second aspect is that we raised a really massive amount of cash two years in the past. And we have been a bit fortunate as a result of the timing was proper,” 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 boost a brand new funding spherical, Qonto might turn into a consolidator within the house. And we is likely to be originally of this consolidation part.