Holvi is a digital business banking service platform focused on freelancers and small business owners. The company, founded in 2011, is also one of the first digital business banking services that appeared on the European market.
This digital banking service claims to combine everything the self-employed and small businesses need to manage their finances. At its core is a fully digital business current account with built-in expense management features, integrated invoicing, online selling and bookkeeping tools and integrations.
Recently, Holvi has reported a record result for January and confirmed it is on track to double revenue in 2023. The growth has been driven by major changes in the company’s ownership, strategy, and product over the last two years.
Holvi’s current CEO and co-founder Tuomas Toivonen has provided Everly.eu with an exclusive interview in which he elaborates on the story of Holvi from being a digital banking pioneer to building a successful business banking service that is live in most of the EEA countries.
Holvi is very specific in the digital banking market because it has been here for 12 years already. I assume a lot has happened and changed. How did you get from the beginning to this point?
We’ve been around for quite a bit, so we are the original cohort of B2B neobanks in Europe. Around the time we started, there were some other folks like N26 on the consumer side but on the business side, we’re definitely one of the first neobanks.
It was a time when FinTech as a term did not really exist. One of our early investors used to joke that he is a FinTech investor now when he invested into a Finnish company.
We started under the Holvi brand in 2011, and for the first five years, we were the pioneers of B2B neobanks. But neobank was a term that also sort of didn’t exist. And that was a super interesting time since as a non-bank entity, we’re offering the small businesses the services that they would get from a traditional bank. It was a novel concept. This also made selling the service to the customers a little bit more difficult because they felt like: “I use Holvi, okay, so in which bank is my money.” And they did not seem to understand that it was in Holvi. This was between 2011 and 2015.
What was the next step?
In 2016 we entered our second five-year mission as a BBVA company. So we were fully a subsidiary of the big Spanish group. At that point, we really believed in what we were doing and that that kind of more digital alternatives to traditional players was the future. But we also saw in 2015 that if we want to build a kind of multi-country basis in Europe it is probably going to cost more than we expect and it is probably also going to take longer than we expect.
However, the funding markets weren’t going to give us the resources that we needed so we decided to go with a strategic partnership. We already had licensing before we joined BBVA but the resources allowed us to expand around Germany for example. Also, it has given us more credibility, not so much for customers but more importantly for the financial industry where FinTech still wasn’t a much-known term.
Fast forward to 2020. Covid, of course, was a big factor, then some internal changes in the BBVA as big corporations have innovation cycles. There’s usually this kind of five-year innovation cycle where something new is happening.
So we went through that innovation cycle and then the opportunity in 2020 presented itself that we could put on a table, a management buy-out, which we then executed on February 21. This way we became fully independent again.
We then had to refocus on profitable growth in 2021 and did something that most companies were forced to do later in 2022. We commissioned free accounts and every customer is a paying customer, and so forth.
And is Holvi profitable by now?
On January 2021, we were still having lost making. So we were singing over a million a month. Whereas fast forward to this January 2023, we are now solidly profitable. In revenue terms, we grew the business over the past two years by 4x.
That is our result of focusing on profitable growth, managing the cost base, and significantly growing revenues. This has obviously put us in a very good place and I am super proud since this hasn’t been easy for the team. We’ve done very big things with a comparably small team at the lowest point, after the management buy-out, about 65 people were working in Holvi. Now we have about 100 people working for us.
Hundred people is a large team but it’s also a small team. So as I said, super proud of everything that the team has done over the past two years, to get us to a point where we are a solidly profitable entity in control of our own destiny.
Are there any products that you plan to launch in the near future and would like to talk about them?
We have been actively working on the top three requests from customers. So we have a full set of payment services for our customers already. Current accounts, credit transfers, direct debits, debit cards, credit cards, etc. So it’s kind of a full set of payment services. But the one area where we haven’t been a market leader is international payments and we are now very actively working on our international payments and currency offering. This we will roll out this spring to customers in different phases before we have a kind of full international payments offering like Wise or Revolut have.
We are also enhancing, expanding and increasing the accounting system connectivity that we have in our core markets to really have these standard file formats. That it can plug-and-play connect your whole account to external accounting systems.
We’ve already had quite a lot of these connectivity setups in place, but we’re now significantly expanding the universe of that connectivity. As we are also bringing in the type of connectivity that larger businesses require.
In which markets are you live and in which would you like to expand?
We now live in a number of markets: Germany, Finland, Austria, Belgium, Netherlands, Estonia, Ireland, France, and Italy, but Germany, Finland and Austria are the core markets. And these are the markets that we are right now focusing on. There are of course interesting markets in Europe that don’t use Euro and if you look at it from our Helsinki headquarters perspective, there is, of course, the so-called Crona zone, meaning Sweden, Denmark and Norway. So those are of course interesting when you look at it from a cross-border and cross-currency perspective.
Which markets are most important to you?
Germany is really the core. The legal entity and the regulation is here in Finland. But in Germany, we operate through a branch meaning that we have full localization in Germany, from German language localization to other integrations like that customers in Germany contract with our German branches, therefore we are fully local players. And we also consider ourselves as dual headquartered, meaning in Berlin, and Helsinki, so those are our core locations.
Are you looking for investors or at what kind of stage of funding do you find yourself?
We are currently open to investors. We’re having discussions with potential investors, and of course, since we are a profitable company it’s a good place to be at. During the current zeitgeist, as a profitable entity, that’s what markets are looking at.
For us, it’s key to have a good valuation. It is more important for us to have investors that we have good chemistry with. It has to be an investor that matches our values. We are a very much values-driven organization.
We’ve always kind of valued that being compliant is not like a cost. It’s what you should do. It’s like the right thing to do, but it’s also the sensible thing to do. So for us, it’s important that any investor that we bring in kind of matches our values and our way of doing things.