Lydia in France obtains a valuation of more than 1 billion dollars after switching to a “superapp” – .

Lydia in France obtains a valuation of more than 1 billion dollars after switching to a “superapp” – .

French startup Lydia seems more popular than ever. It is now the second most downloaded fintech app in France, enabling 5.5 million customers to bank, invest and send money to each other. Giant investors like Tencent and Accel are also supporters of Lydia, joining its $ 133 million Series B.

And – finally – Lydia is a unicorn, valued at over a billion dollars in a new funding round of 100 million dollars, flanked by the American funds Dragoneer and Echo Street.

With the new achievement comes a new set of ambitious goals.

Over the next three years, Lydia aims to become the primary account for 10 million users. It will also use the funds to create new credit and investment products (having recently launched crypto trading), as well as expanding into at least two new European geographies, including Portugal and Spain.

Perhaps Lydia’s most ambitious goal is to become a financial ‘superapp’ for millennials and millennials, following in the footsteps of WeChat in China and even Revolut.

“The superapp is truly the future of banking as we know it. The banking application has improved somewhat, but it hasn’t really changed over the past decades, ”says Cyril Chiche, co-founder and CEO of Lydia. “Applications should really hide all the complexity [of banking]. It must be an interface as close as possible to the real intention.

Since its inception in 2013, Lydia has grown from a peer-to-peer payment app like Venmo to a full banking app with loans, deposit accounts, insurance and a full range of wealth products.

Still, there is a debate around the benefits of a European superapp. The unbundling of financial services means that there are already many powerful applications specialized for different financial needs.

So, is the super app a business model gimmick or really beneficial for users?

“We want to have 10 million customers. It won’t come just by doing things for ourselves, ”explains Chiche.

“The big change [with adding investment features] is that you don’t need to send the money to the investment app. It is therefore debited instantly. And if you think about it philosophically, we just give you access to all of your money at once… It’s always there for you. So if you want to buy a computer and have £ 900 worth of investment, you can take advantage of it anytime you want. “

Chiche adds that the strategy will ultimately help newcomers like Lydia attract bank users, but not destroy them.

“I don’t believe big tech is going to kill banks or anything like that,” Chiche says. “It’s like what happened in e-commerce. If you look at the United States, number one is Amazon, of course. But Walmart is number two.

In the Lydia payment / money management application

To reach her goal, Lydia wants to double her team of 160 people over the next year.

Notably, however, only a handful will get equity capital in the business. Chiche confirms that stock options aren’t automatic for newcomers and most employees aren’t rewarded with options.

The question of profitability

Unlike British startups, French companies like Lydia are not required to share all of their financial statements. This means that there is little transparency around its revenue, although the company has confirmed that it is still in deficit.

It’s a change of plan for Lydia, who told Sifted in 2019 that she now aims to be profitable.

“No, we didn’t do that [milestone]… But we have had a lot of unexpected situations since 2019 ”, laughs Chiche, in particular when withdrawing from the United Kingdom. “Profitability remains an important objective for us. We are now expecting it for the French part of the company in 2023.

Assuming he reached that new deadline, it would have taken Lydia ten years to reach the break-even point.

Nonetheless, the company kept costs exceptionally low compared to Revolut and Monzo, raising only € 257m in total and avoiding marketing. Additionally, the vast majority of its revenue comes from subscription fees, rather than interchange, which are generally more sustainable.

Its new investment platform could also be a big source of money, with the average deal size so far standing at € 30. VSBusinesses earn money from these transactions by charging a spread or commission. They can also make a margin on international stocks by charging for foreign currencies.

Beyond the benefits, Lydia’s journey illustrates the evolution of the French technological ecosystem.

The country has gone from zero tech unicorns in early 2021 to a herd of five, with Lydia alongside Ledger, Alan, Sorare and Owkin.

The French government has redoubled its efforts to make France a “fintech hub” in recent years, and it seems to be working. France is now among the top three destinations in Europe for fintech investors, according to new data, after narrowly overtaking Sweden for the first time.

Isabel Woodford is Sifted’s fintech correspondent. She tweets from @i_woodford and co-authors of our fintech newsletter. register here


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