Embedded finance is still hot in 2023 and there are no signs of it slowing down. Embedded finance is the placement of financial services products in a non-financial services customer experience or platform. This enables financial services to be seamlessly embedded in everyday products that consumers and businesses are already interacting with; empowering them to optimise their financial capabilities.
Monite is a German fintech startup that wants to help B2B SaaS companies become super-apps with automated invoicing, payables, and B2B payments embedded their existing workflows. This is all made possible through their API that only takes 3-5 weeks to implement. With Monite, companies can add invoicing, accounting, payments, open banking, BNPL, and other payments solutions to B2B SaaS solutions – modernising their finance stack.
Monite was founded in 2020. They recently announced that they closed a seed round led by Third Prime of almost €5 million. This recent round brings their total seed funding to be more than €9 million. We caught up with co-founder and CEO of Monite, Ivan Maryasin. We chatted about his journey of building Monite, B2B SaaS, and the future of embedded finance.
Let’s start from the beginning of your journey of building Monite. Could you tell us about what was the aha moment that led you to start Monite?
Driving growth for Penta neobank, I’ve seen that SMEs were complaining about €10/mo for Penta account (which is a complex fintech product) and easily paying €300/mo for Candis (invoice processing, lighter version of AP (Accounts Payable) Automation) or €20-30 for a simple invoicing software. It clearly showed the strength of the pain there.
What learnings did you take from your career in startups that you have applied to starting Monite?
Follow the mission, not the HOW. We wanted to change the way SMEs deal with finance, save them tons of time and automate things. We did B2B first but then saw bigger impact in API-first play, B2B2B. We didn’t get stuck with B2B – we stayed core to our mission and made an expensive shift.
Hire A-players, hire stellar people, and invest in their growth. Pay high enough salaries to get rockstars who can define the industry. A-team gets you out of any trouble and costs 30-50% more. B-team saves you 30-50% but might break down in the face of the challenge.
Follow the money to find the problem – people vote with money, so if they pay for something, it brings some value for them.
Go deep enough to understand how things work – this is why Monite was reverse-engineered from how people do accounting. No point providing invoicing/AP Automation if it doesn’t play nicely with accountant – the accountant would just say it doesn’t work and the company wouldn’t use it.
How did you go about securing your first customers at Monite?
Our first customers, as it usually happens, came to us through team’s network. Plus, with some of them we’ve been lucky to meet at conferences, and they’ve been so happy they have found a solution like ours, so no need for them to build themselves, so they didn’t mind to become the first to test us out.
Network + VC intros + inbound + conferences was the formula at the beginning. Now it’s more inbound marketing and outbound sales + some intros.
Could you tell us about the challenges you have faced since founding Monite? How did you overcome them?
Finding great talent – working with executive recruiters who can reach absolute rockstars. It’s pricey as hell but makes all the difference. Network/VC hiring is almost always too limited until the company is more mature.
Finding the right investors – it’s less about raising money and more about raising money from the right people who get infrastructure business and have a strong thesis in our market. Took us talking to more VCs than average – about 200 per round, and also in more regions.
Staying the course in the market with no fixed current – we opened up a new market and many times had to see where to go and how to handle things in the absence of direct competition and an abundance of “oh but this makes no sense” feedback alongside “great stuff” feedback. Developing a deep market thesis and understanding, a strong backbone behind our approach took some time but we did it thanks to a lot of industry reading, talking to experts, customers, VCs, etc.
Monite partners with B2B SaaS companies so let’s talk more about B2B SaaS. What advice could you offer for operators scaling B2B SaaS companies?
The main competition first is to solve X problem for clients. Next one is competition for their share of mind – you need to maximize the share of mind for the client to maximize the average revenue per user (ARPU). Understand where this opportunity is and double down on shipping value that enables that. Add more revenue lines (see below) + earn the right to run payments for clients. Work on activation for the new features you add – key to get to stronger ARPU.
We are seeing the rise of super-apps in Europe with the likes of Revolut, Klarna, Lydia. How can B2B SaaS stay competitive with the rise of super-apps?
Become super-apps themselves. Add topically related features for clients, get larger share of mind, earn the right to make a payment (AP/AR (Accounts Receivable) enable this).
As we are going through an economic downturn, what suggestions do you have for B2B SaaS companies to weather the storm?
Add more revenue lines (e.g. by embedding AP/AR/payments). Cross/up-sell customers on more functionalities. Close the loop – create end-to-end flows for clients to earn higher margins. Stay cautious slowly building up revenue OR go more aggressive on acquisition but secure higher ARPU per client first.
Let’s look into the future. What will the future of embedded finance look like in the next several years?
Finance will become more hyper-local. Businesses will be able to choose the platform they like most based on the business type and preference and get all the necessary finance features, accounts, B2B payments, and automation from this one platform.
Vertical SaaS is likely to become the champion for what is called Vertical ERP – one-stop-shop systems for specific industries – like Toast for restaurants and similar.
There is likely to be consolidation happening in BaaS, embedded B2B payments, and other areas of EmbFin.
What’s next for Monite? What can our readers watch out for?
Enabling platforms to make even more revenue from AP/AR features. New payment methods enabling new USPs for the end clients. Expanded presence in the US and UK markets.