Recently we got brilliant news about a French fintech startup which got acquired for roughly €50 Million (according to LesEchos). Founder of the Leetchi Group – a French tintech organisation and founding company of MANGOPAY – Céline Lazorthe just sold her company to bank Crédit Mutuel Arkéa. The bank has acquired 86% of it. As part of the deal, Crédit Mutuel Arkéa will also invest €10 million into the Leetchi Group to boost growth. The remaining 14% of the business will be retained by existing management and will remain autonomous and lead business operations. In the interview below, Céline Lazorthe gives insights on the selling process and outlines the future of fintech startups.
Why did you decide to sell your company instead of further growing it as an independent fintech giant? And why did you choose Crédit Mutuel Arkéa as your acquirer?
We had actually started a new fundraising round and we had three term sheets on the table when Crédit Mutuel Arkéa came forward with its offer. After considering the bid, myself and other owners at Leetchi Group agreed that the bank had the same common goals as us and that the bid was beneficial for everyone. We have had a professional relationship with the bank for the last six years. One of our largest service providers, Payline, is a payment-service-provider (psp) which is part of Crédit Mutuel Arkéa. Crucially, the bank holds the same values as we do, encouraging entrepreneurship, strong communities and a personal approach to business.
What are your next milestones for the Leetchi Group?
The acquisition and injection of capital from Crédit Mutuel Arkéa has allowed us to set out and target very clear goals. We will now increase the number of international offices we have, improve our products and boost services to our B2B audience. Over the next two years we are targeting doubling our employee numbers and processing €1 billion.
What countries are you going to expand next? Do you consider moving outside Europe with your product?
Our first expansion will see the launch of leetchi.com – our online money-pot service – into the UK in Q1 2016. Afterwards we can then consider what is the best strategy for further European expansion. MANGOPAY already has customers in 22 countries and a very successful and fast growing office in London. Our next target is to replicate the success of the London office in both Germany and Spain.
What changes can we expect in the fintech market in the nearest future, that could influence everyday life for a regular consumer?
The beauty of fintech is that there continues to be scope for major B2C and B2B innovation every day. I believe B2C banking services are evolving at a phenomenal rate, something I have great experience of thanks to leetchi.com, and that consumers are huge fans of trying new methods of banking. The digitisation of banking will continue at a rapid pace. For example, in France, Societe General has announced it is looking to reduce its number of physical branches by 20% by 2020, and fintech will need to bridge that gap.
Are governments in Europe responsive to do changes in legislation according to needs of new fintech solutions? Did you face some significant problems while launching your product?
Regulators, by the nature of their role, take longer to adapt to the pace of change compared to those who drive changes and fintech is no different. There is discussion already taking place and this will be adapted and adopted at a European and local level like all sectors. We have faced a major challenge regarding third party payments. We have worked closely with providers in this field to ensure that we achieve the proper licencing. It wasn’t easy, but we are now the proud owners of a European e-money issuer licence. This was granted by the CSSF in Luxembourg, has been approved by all local regulators and is valid throughout the whole of Europe.
What attitude do banks have toward new products in finance sector?
Overall they are very positive, I would say. Banks and start-ups each have their own strengths. It is about collaborating to maximise the potential of these strengths. Using leetchi.com as an example, most banks have the technical assets to create such a service, but the idea and execution to innovate a product such as this tends to come from smaller, more agile companies. This isn’t new information for banks, they are closely monitoring the fintech scene for appropriate partners all the time. I am fully expecting our acquisition to be a confidence boost to the financial industry because it demonstrates it can be done. I think you should watch this industry very closely for more M&A in the near future.
The acquisition of Leetchi Group is a rather big one. This has not only a huge impact on the future of the company you’ve founded, but also on your personal live. What will change for you in your day to day life?
Certainly it is a new era for the company and I am naturally very excited and probably more focussed than I ever have been on success. I believe both leetchi.com and MANGOPAY have the potential to be international champion businesses and that is now the goal. A €10 million investment and shared traits across Leetchi and Crédit Mutuel Arkéa is certainly an incredibly strong foundation for the future. I can still remember when I launched leetchi.com with its first user and now we stand with more than four million users worldwide. The sense of reward from seeing people use and love something you have created every single day is fantastic and acts as a real driver for me to continue introducing the service to new people.
Are you planning to do some angel investments in the nearest future? What products or industries you would prefer to invest in?
Not at the moment. Right now I am fully focussed on accelerating the growth of Leetchi Group.