french startup how much raised a Series D funding round of US$552 million (€486 million). After this investment, the startup reached a valuation of US$5 billion (€4.4 billion). This is one of the biggest rounds of the French tech ecosystem.
Qonto is a challenging bank focused on business bank accounts. The startup mainly focuses on small and medium-sized businesses as well as freelancers. It currently operates in France, Germany, Italy and Spain.
global tiger and TCV are leading today’s funding round. With 220,000 customers, Qonto still plans to grow at a rapid pace in the coming years. “Our goal is to reach one million SMEs by 2025,” co-founder and CEO Alexandre Prot told me. “And we know that Tiger and TCV have supported some companies to reach that scale.”
Some new investors are also participating in the round, such as Alkeon, Eurazeo, KKR, Insight Partners, Exor Seeds, Guillaume Pousaz, Gaingels and Ashley Flucas. Existing investors Valar, Alven, DST Global and Tencent are also putting more money on the table.
That’s a pretty long list of investors and Qonto proves once again that private equity firms are actively looking for late-stage growth rounds in Europe.
Image credits: how much
From daily banking to a complete financial solution
What’s interesting about Qonto is that it’s a truly European startup. In the US, spend management solutions such as Brex and Ramp, were hugely successful. As Kate Clark of The Information reported, they want replace American Express and distribute corporate cards to millions of US employees
Qonto started with commercial bank accounts because that is the main financial component of European companies. Many companies use their bank accounts directly to move money. They initiate transfers, share their bank account number (IBAN) to receive a payment, and set up direct debits to pay bills.
And Qonto does it very well. You can sign up on a computer and get a local IBAN a few minutes later. After that, you can also apply for debit cards to pay with your card.
In the beginning, Qonto relied heavily on a third-party banking partner – treezor. The startup then applied for its own license to become a payment institution. In 2020, Qonto moved all of its customers to its in-house main banking system. The company now owns this critical part of the technical stack.
Qonto has expanded beyond the simple bank account. The startup’s CEO, Alexandre Prot, defines Qonto as three different products brought together in a single service. In addition to the day-to-day banking part, it also simplifies bookkeeping and accounting. It can also become your expense management solution.
On the accounting front, Qonto lets you export or sync with your existing accounting solution. This is a fragmented market, as each country uses different accounting tools. For example, you can export your data to Cegid if you are a French company, you can sync with Datev if you are a German company, etc. Qonto users can also import receipts directly into their Qonto account.
As for expense management, Qonto allows you to distribute physical, virtual or unique cards to employees. Administrators can set up different spending limits, an approval workflow, and all the usual things you get from a spend management solution. It may not be as complete as a dedicated product such as Spending, but it may be sufficient for small businesses.
For everything else, Qonto partners with other fintech startups. For example, customers can open a line of credit with October and borrow €15,000 to €30,000. Customers can also open a savings account with Bee and its banking partner My Money Bank.
Image credits: how much
a single bank account
There are 220,000 companies paying Qonto every month. Prices range from €9 per month for the most basic freelancer account to €249 per month for corporate accounts. Also, some companies pay more to get more cards or when they go over certain limits.
What makes the business model even more profitable is that many customers just sign up on their own. When they create their company, they use Qonto for the initial capital deposit to register the company. Essentially, Qonto combines inbound marketing with the high margins of a SaaS product.
“About a third of our customers started their businesses with us. It’s their first account and the only one they use,” said Alexandre Prot. “Two-thirds of our customers are companies that existed before opening an account with us. Approximately half of them close their existing bank account, half of them use Qonto in parallel with one or multiple accounts.”
With today’s funding round, the company plans to increase its staff from 500 employees to 2,000 people by 2025. Qonto will also invest heavily in its existing markets. “We will be able to invest more than €100 million in each of our markets,” said Prot. While there are still many SMEs that are not using Qonto in France, Germany, Spain and Italy, Qonto also plans to enter a new market in 2023.