Fewer big elevators, but more acquisitions. This is how we summarize the news from the last few weeks at French Tech. It’s October’s turn to get its hands on its main French competitor, Credit.fr. The operation, whose value is not disclosed, was carried out partially in cash and in shares.
The two fintechs knew each other well, as they have been operating in the same credit segment for VSEs and SMEs for several years. “We regularly discussed our technology projects. And we knew Tikehau Capital well,” says Patrick de Nonneville, October CEO. The unlisted French specialist acquired Credit.fr for €12 million in 2017. He is also investing in the new set for an undisclosed amount.
For October, this acquisition allows you to quickly onboard experienced employees. In the jargon, this is called a “contract acquisition” transaction. “The job market is tight. Finding a team of around 15 people in the industry that does a good job is very important for a platform like October,” emphasizes Patrick de Nonneville.
An unprofitable model
The new group will include 130 employees and the current head of Credit.fr, Maxime Gely, becomes the COO of October France. “We have practically the same departments. All will join the October teams of the division in question”, specifies Maxime Gely. The Credit.fr brand will not disappear to continue benefiting from natural references in search engines.
Joining in October allows Credit.fr to strengthen itself in a market where it is difficult to become profitable. “Crowdfunding in general has a big problem of scale [passage à l’échelle, NDLR]. Finding the right model is not easy,” notes Adrien Choquet, executive director of boutique M&A Gimar & Co.
October bought Finsquare, a small player in short-term loans, in 2016. “It could no longer continue operating alone,” recalls Patrick de Nonneville. Several crowdfunding players dropped out of lending to VSEs-SMEs like Lendopolis in 2019, which focused on renewable energy projects. Others focused on the real estate sector, the most dynamic and profitable part of crowdfunding in France.
Focus on white label
October is one of the rare players to reach significant volumes. In 2021, fintech produced 185 million euros in loans for 900 projects, while Credit.fr financed 135 projects for 21 million euros. It is one of the few internationalized platforms (Germany, Spain, Italy and Holland). Credit.fr, in turn, created a subsidiary in Switzerland at the end of 2019. “It was completely independent with its own technology”, underlines Maxime Gely.
Unlike many startups, October does not seek to acquire foreign competitors to establish itself in new countries. “We don’t have an M&A department because we don’t need it. It is difficult to integrate a platform in many ways. We did this for Credit.fr because we know its shareholder very well”, explains Patrick de Nonneville.
October also diversified by marketing its loan file verification technology to financial institutions in late 2020. Bpifrance, for example, used it to grant recovery loans launched after the first lockdown. This white label activity now represents 15% of its turnover (which is not disclosed).
Fintech guarantees that it has registered a growth of 35% since the beginning of the year. “We reduced our losses by 40% last year and will continue to do so,” says Patrick de Nonneville, who does not specify the exact amount of those losses but indicates he is building on his latest fundraising of 32 million. … in 2018.
Fintech is also carefully reviewing the new European approval governing the sector, which is due to take effect next November. Without this Grail – which October requested – platforms will no longer be able to carry out their activities.