Cooperation between traditional financial institutions (i.e. banks) and young fintechs seems to become an interesting trend worldwide. One of the banks that pulled the trigger as first in this area was Czech bank Komerční banka that through its subsidiary KB SmartSolutions makes investments into financial and technological start-ups, i.e. fintechs, and creates an ecosystem of partnerships between these two worlds. We are interested in how such partnership actually happens, what works well, and also what could have been done differently. So as we would like to know where is this heading and how could the current products and services be improved.
Trying to get into the heart of the matter, sum, and substance, we bring you a mini-series of interviews about this topic. In the last weeks, we have already brought you an interview with Patrik Nový, Director of KB SmartSolutions, Petr Volný, Co-founder and CTO of Upvest.cz, Adam Šoukal, Founder of Platební instituce Roger. Today we bring you the final piece – the last part of the mini-series and the interview with Jan Laštůvka, Founder of Lemonero.
- Where does the idea that a bank could be your investor, or even a partner, come from?
In the beginning, Lemonero financed e-shops exclusively from its own financial resources. However, as soon as we were able to prove that our business model works, we have decided to increase the amount of funds available for e-shops and we also wanted to continue investing in further development. We had offers from classic VC investors, but we were more interested specifically in someone who has had a strong and established brand for years, someone stable in the field of finance and with also with capital. What shows that banking institutions were to be great candidates.
2. Why Komerční banka?
Our first contact with Komerční banka was actually with colleagues from KB SmartSolutions and already from the initial discussions, we realized that in many things we have a very similar opinion – one of these is how to further develop and scale our business. It was also a pleasant surprise for us that the bank with the size of Komerční banka really wants to cooperate with start-ups and not only talks about it but actually realizes these partnerships and tries to break the apparent barrier between the corporate and the start-up world.
3. What are the advantages or disadvantages of cooperation between a start-up/fintech and an institution of the size of Komerční banka?
The indisputable advantage of cooperation, if we omit a wide client base and financial resources, is many years of experience and know-how in the field of finance. Here can Komerční banka help us significantly and move us forward much faster than we could do on our own. A great advantage is also the possibility to use assistance in the area of operation or distribution, sales funnel, negotiations with suppliers, security solutions or managing the company economically, etc.
On the other hand, I think that the partnership between the corporate and the start-up is not easy to realize, because both have different DNA and language. There is also a big difference in the single opinion they have on risk adoption – while the bank, as a regulated business, naturally has a significant aversion to risk, young start-ups, on the other hand, take risks every day. Even these differences can be the reason why it sometimes takes a long time to find a common path. Although I’m not sure if this is a downside in the true sense of the word.
4. When you think of it retrospectively, could you remember that specific moment in which you decided that Komerční banka really is the right partner for you?
Definitely a meeting with Patrik Nový and the KBSS team and subsequently with the KB management. We decided after we confirmed that they have the same vision as we do and that joining forces makes sense.
5. When we compare start-up and corporation and their company culture, do you think that this connection will also cause that they will more or less adapt to each other? Do you think that the start-up on the one hand shall adapt to some corporate rules and the bank on the other hand shall learn to be more dynamic?
KB is a minority investor, so we have full autonomy. We see its goal in our further development and growth. Together we look for other business opportunities and we try to scale the business as much as possible, find and build new products, services, and business models. So to answer the question I see no need to adapt to each other. However, we can truly learn a lot from one another.
6. How and for how long did the mutual “courtshiping” last?
We at Lemonero could also imagine a faster course of courtship, but given the fact that Komerční banka is a regulated business and the whole negotiation process was marked by a coronavirus crisis, I think we managed to sign our cooperation quite quickly. It all took about 8 months.
7. Does this equity entry into Lemonero mean any changes to your business model?
The biggest change is that we have a strong partner behind us. As I mentioned, KB is a minority investor, so it helps us mostly within the development, but the final decision is ours. Our business model is fully functional and we will scale the product as much as possible, invent where and how we could expand and enrich it.
8. What has happened since the asset entry? What are the next development and expansion plans?
We started talking about further development steps already before the equity entry itself. Today it is eight months since Komerční banka’s entry into Lemonero and we have walked a long way together. The entire amount invested by Komerční banka went directly to our development and further growth, and the cooperation itself takes place at several levels – scaling growth, product cooperation, and preparation for expansion into foreign markets.
In terms of our growth, it actually happens quite fast in the Czech Republic. Last month we have established the position of Lemonero as the leader in e-commerce and omnichannel financing. We have launched a new revenue-based financing product and partnerships with the biggest Czech e-commerce players and marketplaces.
Currently, our next step is to scale our platform across Europe. Our mission is clear: to disrupt business financing through big data & AI and to help SMBs grow and achieve their dreams 😊.
You can find more information on www.kbsmart.cz/en or on https://www.lemonero.com/.
