Qonto, the French fintech unicorn, gains ownership of Regate after securing substantial funds.

And it is using an undisclosed portion of its cash reserve to acquire Regate, an accounting and financial automation platform. Qonto originally started with online business accounts with debit cards specifically tailored for small and medium businesses. After a while, Regate will be integrated in Qonto directly to improve several accounting automation features of Qonto, such as invoicing, accounts payables, accounts receivables, etc. Qonto finds itself in a different position from Payfit, another French unicorn (or former unicorn) that provides a software-as-a-service tool focused on payroll. As many fintech startups are struggling to raise a new funding round, Qonto could become a consolidator in the space.

The world of entrepreneurship can often be a difficult one, with many business owners struggling to secure funding. However, Qonto trudges on undeterred, as the Paris-based business banking startup still boasts a considerable cash reserve. In a move to expand its financial product offerings, Qonto has recently announced its acquisition of Regate, an accounting and financial automation platform, utilizing a portion of its cash reserve to seal the deal.

Qonto initially launched with the goal of providing online business accounts equipped with debit cards tailored specifically for small and medium-sized businesses. As time went on, the company broadened its services to include invoicing tools, expense management features, and various integrations with the fintech ecosystem aimed at simplifying bookkeeping and payment reconciliation.

This innovative approach to business banking has proven to be a success, as over 450,000 companies now hold a Qonto account. While Qonto’s main focus remains in France, the company made a strategic move in acquiring its German rival Penta, ultimately absorbing Penta’s customer base into its own platform. Qonto is also available in other European countries, such as Italy and Spain.

In 2022, amidst the funding frenzy of the previous years, Qonto raised a staggering €486 million in a Series D funding round (equivalent to $529 million in today’s exchange rate). With this significant influx of capital, Qonto now aims to fulfill its original vision of creating an all-in-one financial solution for small and medium businesses.

The acquisition of Regate aligns with this vision, as the French startup specializes in accounting software-as-a-service. Regate integrates seamlessly with popular accounting software platforms like Sage, Cegid, and ACD, streamlining financial automation processes for its users. Customers can track incoming payments, schedule payments to suppliers, organize invoices and receipts, and even access their bank accounts from Regate’s user-friendly interface.

Since its launch in 2020, Regate has garnered 10,000 clients, with 6,000 of those clients already using Qonto’s services. Additionally, Regate sells its product directly to accounting firms, with 500 firms currently utilizing the software.

This differs from the approach of Pennylane, a recently established French unicorn focused on replacing legacy accounting software entirely. However, Pennylane has recently entered the business bank account market, overlapping with Qonto’s primary product territory.

“We saw a 3x increase in revenue in 2023,” said Regate co-founder Laura Pallier in an interview with TechCrunch. Despite this success, when Qonto expressed interest in acquiring Regate, the decision was quickly made to join forces and reach the next level. Pallier explained, “We had in-depth discussions on the subject…We are convinced that the cockpit approach – having a tool that caters to both SMEs and accountants – makes more sense than having multiple products.”

As part of the acquisition, the team of 100 employees at Regate will join Qonto’s current staff of 1,400 under a new business unit specializing in financial tools for accountants. Initially, the two platforms will be integrated, offering users new functionalities and a seamless experience between the two services.

Qonto co-founder and president Steve Anavi emphasized that Regate’s acquisition is only the second in the company’s history, and likely not the last. Anavi stated, “We have an internal team dedicated to seeking out opportunities. Ideally, we will make a deal. But even in the worst-case scenario, we could form partnerships since we have gotten to know each other well through this process.”

The time is ripe for acquisitions, as Qonto has observed a perfect alignment of opportunities. Anavi explained that it would be a mistake to ignore such possibilities and highlighted the company’s “cockpit approach,” where they collaborate with experts in various fields rather than trying to do everything themselves.

In contrast, another French company, Payfit, is experiencing financial struggles, with reports of planned layoffs. Qonto stands apart thanks to its sound business model, with each customer eventually becoming profitable after a few months. This is a result of Qonto not offering a free service but charging for all its offerings. Additionally, Qonto raised an impressive amount of funding two years ago, which was also timely and fortunate. Finally, rising interest rates have created additional revenue streams for the company, further solidifying its financial stability.

Thanks to these factors, Qonto has ample cash reserves to pursue future acquisitions and could potentially become a consolidator in the fintech space. It seems that we may only be witnessing the beginning of a consolidation phase, with more exciting developments yet to come.

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Kira Kim

Kira Kim is a science journalist with a background in biology and a passion for environmental issues. She is known for her clear and concise writing, as well as her ability to bring complex scientific concepts to life for a general audience.

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