To paraphrase the well-known advertising slogan, one of the basic rules of business survival could be something like “observe, analyze your market and if you have to change your model, do it”. Bascularizing the initial idea of the business is one of the most difficult decisions for entrepreneurs, but it is also often the key to success. That’s what happened to the founders of Kantox, the fintech that started in 2011 at the hands of Philippe Gelis, Toni Rami and Joan Carvajal to mediate in foreign exchange.
“There are two stages: until 2015 and 2016 we were very focused on transparency and better price and from 2016 we started to specialize in technology, sophistication and automation. We realized that if we continued focusing on price it would end up being a low cost race towards the lowest price. These low cost races are never a good idea because it is to start a war against margins that requires raising a lot of money. We thought it was better to try to position ourselves through a differentiated technology. That is to say, we decided that it was better to position ourselves as the most sophisticated actor rather than as the cheapest actor. We anticipate how the market would evolve and chose the most solid path in the long term.”
Explains Gelis, the CEO of the company.
And he continues: “It is not a change that one poses from one day to the next. If you do not talk to clients, you start to see similar problems, you understand that there may be a way to solve it with technology, you develop the product internally and you understand that there is a good approach “.
And what began as a decision of pure survival, has become just two years in the growth engine that has allowed them to sneak into the list of the 100 fastest growing European startups, according to the Financial Times, with a sustained increase in 1688 %.
“The innovative solutions we have developed now represent half of the business and revenues, when two and a half years ago they almost did not exist. The growth of the company is closely related to these solutions. In essence, these solutions automate large-scale currency transactions. It is designed for companies that have hundreds or thousands of sales in foreign currencies every week. In particular, we automate the risk management linked to these operations. That is highly valued in the market and that is what has differentiated us and has led to this growth. If you develop solutions with a lot of value for clients, customers use them and talk about them and get more customers. There is no limit to growth, it is a snowball effect. In B2B the dynamics are different. In B2C many companies grow because they spend a lot of money and do a lot of advertising, not necessarily because they have the best product. In B2B, the value that you bring to the customer is the most important, the one who is willing to pay for it and who stays with you.”
Among the milestones that the new direction has brought is the technological collaboration with the bank:
“Not in white label mode, as it has been published there, but with the name of Kantox clearly visible next to the name of the bank. The idea is to offer technology to large clients in the company of the largest and most advanced financial entities. We are already collaborating with two large European banks, although it is not official and we can not give names. It is still a small thing in our business, because we started it in April, but it is our shortest-term challenge: to push collaborations with banking partners and to consolidate it in order to have a significant volume of business within a year.”
Although not planned, this change to becoming a technologically sophisticated actor has had a major impact on the day to day of the company: “this approach more software than pure currency exchange makes the way we sell, we do marketing and We support customers differently. Internally it was a new challenge, a part of the team was prepared and had the capacities to adapt to this transformation and other people did not and generated some rotation. But today is a challenge overcome and is clearly the future of the company, is what really leads to the growth of the company.
To face this transformation financially, the existing investors put 5 million (which joined the 18 captured throughout the history of Kantox) and asked for two million debt to Silicon Valley Bank.
“We did not make any meaningful round because we had the capacity to evolve without a lot of capital, it was a natural evolution. In the next few months, we do a round because now we have demonstrated the opportunity that exists with this much more technological and more sophisticated operation and I think it is time to put more gas in the company to accelerate. The objective, to sign more engineers, more commercial, more senior with experience in the sector to help us structure the company for the future. It is about making the team grow, investing in more technologies. Small things that are ultimately the ones that mark the difference. Sometimes you invest too much in marketing and advertising, without thinking enough about the product itself.”
With a staff of 80 people and achieved profitability since January 2018, who better than them to venture where will the fintech go? “Banking is not capable of evolving at the level of product or user experience at the speed required by the market, so I believe that there will be more and more Fintech that will be a kind of Front End for users.” Now, as he insists, “we must go towards more innovative things that do not yet exist. Do new things. You can not copy what triumphs abroad, because those players are large multinationals that by default will end up coming to Spain with more money. We have passed the first phase of loans and products and now we have to look for more sophisticated solutions.”