It has been one of the news of the year in the industry start-ups Catalans: Kantox, the eternal promise of fintech from Barcelona, has made the leap to being acquired by a large bank. The buyer has been the French BNP Paribas, which has paid 120 million to buy the 85% that it did not yet control of the company, born in 2011 in Barcelona (although with its registered office in London). The big winners, apart from the founders, are the French funds Partech and Eurazeo (they each had 23% of the capital) and the funds of Luis Martín de Cabiedes and Javier Santiso (Mundi Ventures), with approximately 6% each.
Between that money and what BNP will pay Kantox’s founders if certain goals are met in the coming years, the company’s valuation in this transaction is around 150 million, making it one of the biggest sales in the industry Catalan. These magnitudes may be surprising a priori, considering that Kantox has never had a full year of profit: in 2021 it lost 2.5 million (the previous year, 4 million) having invoiced 13 million (up 37%) and thus completing an entire decade of losses. How do you explain someone paying so much for a business that loses money?
You have to go step by step. One of the keys to Kantox was the change in business model that they started in 2017, leaving behind a commission model to push their own technology.
The success was to become a business based on its own technology, surely one of the aspects that is most missed when we analyze Catalan entrepreneurship
Initially, the company was simply dedicated to changing currencies (from euros to dollars, for example) over the internet and with much lower commissions than banks: they could do this because they had a lighter structure. But there was a problem: “We saw that competing on price is always very complicated”, explains Philippe Gelis, one of the four founders of Kantox. The tradingas this business is known, “has many figures but few results”, points out Luis Martín de Cabiedes.
Therefore, from 2017 they began to change their business and introduced their own software that connected the customer’s information systems with those of Kantox: through this system, the company’s technology allowed the detection of risks that exchange rates could cause the customer (for example, if the pound sterling suddenly falls). And automatically, the software hedged the risks by making the appropriate forex trades. “This was indeed a value proposition: even today we don’t have any direct competitor that does this”, boasts Gelis.
The success, therefore, was to become a business based on its own technology, surely one of the aspects that is most missing when we analyze Catalan entrepreneurship. “There have been many more in Barcelona start-ups of marketing, where the technological component is not so important – reflects Cabiedes. For a long time investors have been asking entrepreneurs about the sales volume of their companies, and when you are asked this all day it is difficult for the entrepreneur to focus on developing his technology”.
Either way, Kantox was losing money. Gelis clarifies that, since January of this year, they have won every month and assures that the arrival of covid postponed the long-awaited entry into profits: “When the pandemic arrived we were starting to have our first months of profitability”, he explains. According to the entrepreneur, in the past the ecosystem of start-ups he forgot about the need for businesses to be profitable, but in recent months that has changed.
“Kantox wasn’t making money, but it had manageable losses – Cabiedes says -. But, obviously, ours is an investment business: we put money in with the hope of getting paid later.” In this case, it has been so.
Protagonists
The investor Luis Martín de Cabiedes is a sensible voice that should be listened to whenever the entrepreneurial ecosystem is X-rayed. Without being a provocateur, he has no hairs on his tongue and analyzes everything with common sense. In a conversation with this newspaper, after explaining Kantox’s business model, he assures that he sees Barcelona “very well”, with remarkable entrepreneurial health: “I have many more stakes here than in Madrid”, he assures.
Now, compared, where the Spanish capital beats Barcelona is in the amount of capital available for entrepreneurs. But what reason explains this difference? Why are there more cales in Madrid? His answer: “Because Madrid has the ICO!” It turns out that the fact that the Official Credit Institute is based in Madrid translates into a greater amount of money available to entrepreneurs in the Spanish capital.
This Monday the RCD Espanyol foundation will hold a posthumous tribute to José María Gay, economist and fervent parakeet. Always of extraordinary good humor, Gay became a member of the club’s board of directors and, as an analyst of football club accounts, he questioned some practices of Florentino Pérez, who ended up suing him in court. Gay, a person of integrity, won the trial. The tribute he will receive today is more than deserved.