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Hey, Mr Retail Banker…
Barbarians coming for you!

Jean Bourcereau
Mar 24, 2015 · 4 min read

And why I invested in Unilend

In many conferences I gave over the past years, I used what I find an entertaining parallel between surfing and entrepreneurship.
Indeed, with very limited means (as in, only a lousy surfing board), the entrepreneur must compete and comprehensively beat industry behemoths (as in, giant cruise liners). To achieve this, not only the entrepreneur needs to be great at surfing, but he or her also needs a damn powerful wave to both propel the whole thing as fast as possible and scare the motorboat out of the action.

As venture capitalists, at Ventech we spend our time watching the waves and looking for the best surfers. Over the past 18 years that we’ve been around, we saw most traditional industry sectors getting under attack, one after the other. It has been a fantastic opportunity obviously for venture capital to expand far beyond traditional technology-heavy plays and roam around an almost infinite playground.

Depending on the quality of incumbents’ leadership, the intensity of the attack or many other reasons, different industries had different fates: telecoms were hit early on but adapted and survived; entertainment suffered like no other; travel was deeply transformed forever; ground transportation, hotels and others are currently under fire.

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Retail banking thought they escaped the digital revolution. Big banking institutions managed more or less to contain the first wave of attackers, when “online-only” banks tried to capture significant market share from 2000. Benefiting from post-internet bubble dreadful conditions, the incumbents managed to suck the life out of newcomers, or at least buy them out for reasonable prices.
And then they thought they could get away with it… Instead of this, they might be witnessing the biggest wave of the moment shaking their backyard.

Bad news for retail bankers is that they have all the attributes of a sector that is so appealing to the digital barbarians: comfortable positions with managers (as opposed to entrepreneurs) at the helm of companies they never owned, big fat margins, scalability and poor customer care. Sounds like an eldorado for entrepreneurs.

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And then people like LendingClub, Wonga, Klarna, Xoom, Borro, just to name a few, jumped on the occasion, not only revamping the aging user experience of 200 years old banks, but reinventing the entire economy around it.

We’ve been meeting with a whole lot of entrepreneurs and companies in the past years around these topics, all across Europe, looking for the right team at the right time. And we were pretty committed on finding at least one in France.
Indeed, French retail bankers comfortably sit behind their double Maginot line:

  • We are a regulated business, so start-ups can’t seriously come and bother us”. Ah, yeah… interesting. Tell this to the telco guys, they will most likely share their (painful) thoughts about this one.
  • We are an (unofficial) pretty efficient oligopoly”. True enough: retail bankers have done a great job buying out virtually all small entrepreneurial banks (usually family-owned, geographically focused banks) to craft themselves a nice oligopolistic situation. Bad news is that electronic marketplaces now put transparency at the heart of customer relationship, killing old practices, stimulating aggressive competition, eating alive fat margins and putting on the spot old and sleepy leadership.
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At Ventech, we are thrilled to lead an €8m Series A round into Unilend, French leader for crowdfunded loans to SMEs. A young market this is, as Unilend has been the only active player for almost a year, but a fantastically promising one.

SMEs deserve everything a platform like Unilend can offer: lightning-fast answers, process transparency and quick funding (think 3 to 4 weeks overall to compare with 4 to 6 months with a bank).
And lenders (consumers and institutions) deserve also the best: superior returns, transparent commissioning, direct view on their investment and localized support of the economy.

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