Inside Qonto

Teamwork, prep and focus: how Qonto set a Series D funding record

January 11, 2022 by Mark Davis

In the build-up to Qonto’s announcement of a record 486 million Series D, nowhere was the suspense and excitement felt more acutely than in company HQ. For confidentiality reasons, the specifics of the deal had to be kept secret even from most Qontoers throughout the process. Needless to say, they had many questions. Qonto co-founder and CEO Alexandre Prot (main photo, R) found time between plugging leaks to the press to give some insights into the fundraising process and how he and fellow co-founder Steve Anavi lived the experience.

Will you be able to relax slightly, now that the details of the Series D have been made public?

Not at all! With an announcement like this, there’s obviously a lot of buzz and excitement, people getting in touch to congratulate us and present us with opportunities. It’s really important that we keep our focus, that we keep our eyes and ears open so that we can assess all the various doors that inevitably open after such a big announcement. It’s equally important to be able to cut through the ‘noise’, by which I mean the less useful offers and distracting feedback that this great news generates.

Is there a “we did it” moment in a process like this, a moment when you realize you’ve succeeded?

There are several points in the process when you’re almost tempted to think “we’ve done it” but, in fact, it happens in stages. It’s never done until it’s fully done. The first big moment is when you receive the investor term sheets by email, stating that investors are willing to invest and outlining their conditions. Signing a term sheet is a big step. It’s just a couple of pages long, and they are not legally binding; things can still go wrong at this stage, even if that is quite rare, especially in tech.

The second big moment is signing the investor and shareholders’ agreements. These are much longer, legally binding documents that are heavily annotated by lawyers and that go deep into the nitty-gritty of the terms. You have to keep your eye on the ball especially carefully during this step.

“It’s like arriving at the summit of a mountain...those last few hundred meters take a stubbornly long time until finally you see the top and you know you’ve made it.”

Then you have the closing stage, which requires getting all the hard copies together to be signed and informing the regulator. But it’s not until the funds are wired into the account that you can truly say you’ve “done it”, as it were. It’s the most trivial stage, perhaps, essentially a series of simple money transfers, but it’s the most visible sign that the deal is complete. This is the biggest “we’ve done it” moment.

It’s like arriving at the summit of a mountain. You’ve spent so much time and poured your effort into climbing up, thinking “we’re nearly there, not far to go” and those last few hundred meters take a stubbornly long time until finally you see the top and you know you’ve made it.

Qonto co-founders Steve Anavi and Alexandre Prot

So once you’re at the summit, you can enjoy the view for a while?

You can allow yourself to admire the view for a short while, yes. But then you have to hike back down! You have to remember that this achievement comes with an enormous amount of responsibility. Investors invest in the future, not in the past. The past is important in showing you what’s possible for the future, but what matters to us now is the future. We have no choice now but to grow this fantastic team and cement our place as leader in Europe.

What did you learn from previous funding rounds that you were able to take into this Series D?

We’ve improved consistently round after round and that’s thanks to several factors.

The first is that we no longer have to prove that our idea, our mission, is valid and worthy. The work the team has done over the last five years has already convinced investors that we are solid and reliable and valuable. We’ve earned that credibility as a team.

“...if we do start down a wrong path, we’re able to understand that very quickly and adjust accordingly.”

The second factor is the team itself. In the very beginning, we were alone as just the two founders of Qonto, working things out for ourselves. Month by month, we’ve added to the talent pool of Qonto and become a factory of smart ideas. We’ve been fortunate to be able to surround ourselves with extremely capable, hard-working people from diverse business and cultural backgrounds, each with a fresh perspective. If there’s something that doesn’t quite work, every single Qontoer has the freedom - in fact, has the duty - to challenge that idea and suggest alternatives. So, if we do start down a wrong path, we’re able to understand that very quickly and adjust accordingly so that we end up heading in a direction that’s richer in opportunity. It’s perhaps our greatest blessing here.

“When you’re raising funds, you’re competing with other companies for investors’ attention, for their bandwidth.”

We’re also better prepared. Preparation is always crucial, but in finding investors it’s the golden rule. Over time, we’ve learned to be meticulous. In the beginning, when our idea was in its infancy, there was less concrete information for investors to examine. It was more a question of our ideas and our words. It was more abstract. Then in later rounds, there’s far more scrutiny on the numbers, on the hard data. Vision and ideas are still important, but cold, hard numbers are the main currency at this stage of investment and we’ve been able to become more ruthless in our efficiency. When you’re raising funds, you’re competing with other companies for investors’ attention, for their bandwidth. So the more prepared we are, the easier it is for them to give us their attention. We were ready and they were ready to work on the deal.

Another factor, an outside factor that has helped us develop our ability to find the right investors is the strength of the fintech sector generally. It’s much ‘hotter’ than it was even just a few years ago. So we feel we are in the right space at exactly the right time.

What does it mean to you to have raised a French record investment for Qonto?

Of course there’s a great sense of pride in our team, both the management team that has navigated this fundraising process, and also in the wider Qonto family as a whole. It’s quite humbling to think of all the efforts that have been poured into Qonto by our Qontoers. Especially in a team that is growing so fast and constantly having to adapt to the evolving operational processes of a hyper-growth company. All of our Qontoers can share in that sense of pride.

On a personal level, yes, to some extent there is a sense of pride. But the important thing is to stay focussed. What makes us proud is that even for such a young company - at five years old we still are a young company - we’ve managed to get that external market validation for everything we’ve been building and also for our vision for the future. And of course we’re delighted that we now have the means to accelerate even further, to kick on from here and keep building tools that add value, keep improving customer service. It’s more firepower for us to carry on building.

How can you describe the pressure of going through this process?

There is always going to be pressure, but the nature of the pressure changes. Bringing new investors on board brings with it extra pressure but I would say it’s a positive pressure. It’s a pressure to excel and achieve the maximum rather than the pressure that comes by fearing failure. I used to run marathons and to put it in those terms, you know that you’re going to finish the race, there’s no pressure in that sense. But you put the pressure on yourself by giving yourself a target, by saying “I want to finish in less than 3.5 hours”. Take longer than 3.5 hours and you’re left with a sense of disappointment, even though what you have achieved is still quite remarkable.

What advice do you have for new company founders seeking to raise investment?

“It’s not just about raising money, it’s more about raising what we’d call ‘smart money’.”

We can only really talk from the experience of doing it with Qonto. And as Qonto’s experience of fundraising has been a positive one, it’s hard to advise other entrepreneurs to do it any other way.

It’s very useful to have business angels who know your sector on board from Day One. It’s not just about raising money, it’s more about raising what we’d call ‘smart money’. We are blessed to have had professional, institutional investors with us on our journey. Thanks to their know-how and deep understanding of our sector, they were able to advise us on vital strategic matters: how to structure a team, how to grow it, where you need to be looking to expand geographically, how to set out the right fundraising timeline and when to plan each round.

Even once you’ve secured funding, you then have to spend it wisely. You have to grow fast but not too fast. If you burn through too much money too quickly, it might spook your investors. Invest too little or too slowly and your development curve might not be steep enough. The right investors can help you plot your trajectory. They know the terrain better than company founders. They let the founders run the business but their insight can be so precious.

So it’s best to have professional, knowledgable investors on board from the very beginning.

Finally, what 3 words would best describe how you feel now the announcement has been made?

It’s very difficult to condense into three words everything we’re feeling but perhaps one adjective is “relieved” that we’ve emerged from this process with everything that we hoped for, and more. Relief to be able to put a tough and sometimes stressful process behind us and take Qonto to the next step.

I would also say energized, because the validation of the investors, as well as the implication and hard work of the Qonto teams, provides us with fresh impetus to drive forward.

And finally, we feel very determined. Because the hard work is far from over; on the contrary! We have no choice now but to be the European leader in business finance. That has been our ambition for some time, and now we have earned the means to be able to achieve that.

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