German fintech unicorn Mambu tells the story of how it reached a valuation of $2.5 billion. Interview with CEO Eugene Danilkis.
Startups give investors a hyperbolic 30-second elevator speech and a PowerPoint presentation filled with mentions of customers and pain-points, spiced-up with tech jargon. Berlin-based fintech Mambu is way past that. The company announced this morning that it had received a $135 million investment from a group led by veteran tech investment fund TCV. This new round brings the valuation of the company, launched in 2011, to over $2.5 billion.
Mambu´s co-founder and CEO, Ukrainian-born, Canadian citizen, Carnegie Mellon graduate, Eugene Danilkis gave Latin Trade a compelling, down-to-earth, business story that he tells investors. This is pretty refreshing in times when so many impromptu financiers and strategists offer unproven ideas to attract venture funds and to succeed in the digital world.
Mambu’s PowerPoint was credible to TCV – a company that saw presentations from newly-formed Netflix, Airbnb, Facebook, Linkedin, and Zillow –, because Danilkis knows what truly drives business.
In his interview, Danilkis said that he first, brings out the strength of the team to the attention of investors. He then displays his vision, proof of the product´s market fit and of the technology deployed and shows a good amount of strong references.
He discusses his view about industry trends for the next 5 to 10 years and demonstrates how his company is well-positioned against its competitors to capture open opportunities in this environment.
All this is simple, but organized, serious, business talk that shows that a great deal of information and thought is always put into the design of Mambu’s strategy.
To top it off, the CEO shows results. Mambu grew triple-digit since its inception. In 2020 the company grew close to 100% year on year “in a banking software market which Gartner currently values at over $100 billion and is forecasting to grow at double-digits,” the company stated in a press release announcing the result of the round.
Danilkis´s company is an API-based SaaS core banking platform, which enables banks, lenders, fintechs and others to transform their entire IT landscape into an adaptable, cloud-based delivery model.
This is how Mambu persuaded Tiger Global and Arena Holdings, to put their funds on the round announced today and, previously, convinced Bessemer Venture Partners, Runa Capital and Acton Capital Partners.
Despite Europe’s tradition of keeping companies family-owned and private, Mambu’s long term financial strategy will take the IPO path.
However, Danilkis does not want to rush a listing. He believes that the company has to get the right size and wait for the right moment to go public. For the time being, it will concentrate on incorporating all the operational complexities that a public company requires, he said. This phase will probably take 2 to 3 years, but will make Mambu an IPO-ready company. From then on, it is a matter of waiting for the right opportunity.
An expanding market
As with many other digital firms, Mambu’s market was boosted by lockdowns. “When Mambu launched in 2011, we knew the future of banking would have to be built on agile and flexible technology. Nearly a decade later, this is more true now than ever,” Danilkis said.
Mambu’s platform is used by traditional banks, fintech startups, financial institutions, nonprofits and other businesses to power their financial products and services. Its customers are the likes of ABN AMRO, N26, OakNorth, Orange and Santander, and its technology is behind the building of new fintechs as well as the migration of existing financial institutions onto a tech stack fit for the fintech era.
Danilkis believes that fintech, especially B2B, is on its early days. He sees an “immense space” for new ventures. Neo-banks can emerge from scratch, be spun out from existing businesses, or built with partnerships with tech companies. He believes that many consumer brands will also want to offer financial services in the future.
All these changes can be brought about using the same basic technology Mambu provides. That is why Danilkis sees a growing market in many new spaces.
Growth is an interesting concept at Mambu. The lion’s share of the new funding – as it has been the case in the past –, will go into software development which, with minor adjustments, is globally applicable, Danilkis told Latin Trade.
Geographic expansion as the one announced with the new round of financing implies forming small country teams in charge of customer acquisition, partnerships, and customer onboarding. Hence, deepening its footprint in the more than 50 countries in which it already operates is not a monumental task.
Mambu will focus on markets like Brazil, Japan, and the United States. According to the CEO, Brazil is one of the largest in the world where consumers have shown a distinct appetite for new financial solutions. He also mentioned Mexico, Colombia, and Argentina as interesting markets in the region.
Also check out our series of podcasts on the future of banking in Latin America.