F10 alumni Sonect opened offices in Mexico City in November 2019. The FinTech Startup operates virtual ATMs which allow end users to withdraw cash with or without their next purchase at grocery stores, kiosks and shops, while dining out at a restaurant or when having a pizza delivered. Sonect shares their latest success story and provides tips for other Startups with expansion plans.
The FinTech Startup Sonect had participated in the first batch of F10 FinTech Incubator & Accelerator’s P2 “Prototype to Product” program. Since completing the program, the F10 Startup has written multiple success stories: collaborations with renowned banks, winning the global Innovation Jam by Temenos in Dublin in May 2018, ranking among the Top 100 Swiss Startups in 2019 and being selected as one of the 50 hottest European Startups by the FinTech50 in 2019. Sonect is a B2B2C business. Business customers are retail banks and the end users are business as well as private customers.
“Convenience is the number one reason to use Sonect”, explains Sonect CEO Sandipan Chakraborty who had come up with the idea of virtual ATMs when he was in desperate need of cash to pay for the babysitter. On a snowy Friday night, he was hurrying to the next ATM – which was about 600 meters from his home – and watched his neighbourhood pizzeria selling pizzas and filling up their cash register to the brink. “Parents are often busy and forget to keep cash in their wallet but depend on it as they have to pay for babysitters, pocket money and stuff at their kids’ schools – all of which is paid in cash in Switzerland”, Sandipan observed. With Sonect, end users can withdraw cash with or without their next purchase, while dining out at a restaurant or when having a pizza delivered. The owners of shops, restaurants and deliveries benefit by gaining new clients, offering a better customer experience and reducing their cash overheads. Since operational costs of ATMs are also reduced, banks could benefit from Sonect’s decentralized cash distribution model as well.
Addressing the challenge of financial inclusion
After already operating the largest ATM network in Switzerland, Sonect is expanding. The F10 alumni is about to launch their solution in several European countries as well as in Mexico and has opened offices in Mexico City in November 2019. “Mexico is still a very cash-heavy society with 90 percent of all consumer payments being done by using cash. When accessing cash, Mexicans are struggling due to an insufficient ATM network, high fees and insecurity as the ATM is the number one spot where Mexicans feel insecure. Finally, approximately 50 percent of the Mexican population is unbanked. By bringing our solution to Mexico, we realized that we can improve the lives of all Mexicans while also help with the challenge of financial inclusion”, says Jan Heinvirta, Director Business Development Americas at Sonect. “Similar numbers apply to most Latin-American countries. Mexico therefore serves as an ideal market to start operating in the region and expand from there”, Heinvirta continues.
What do Startups need to consider when expanding their business to other countries? According to the Sonect Business Development Director, they should not underestimate the costs and regulatory environment. “Other markets have their own particular set-up which results in different cost structures and regulatory responsibilities”, Heinvirta explains. “It is important to first explore the market thoroughly and get different opinions by talking to local experts, other companies, regulators and lawyers. This will help you to learn whether you are ready for this market.”
Open communication within the team is key
According to Heinvirta, Sonect addresses issues related to cultural differences with diversity and communication. “Our team has always been very international and diverse – therefore, we were able to build a company culture that fits our team in Switzerland equally well as the one across Europe and in Mexico. If everyone shares the same values, it is much easier to ensure that team members across the globe are able to work together.” The Sonect Business Development Director for the Americas emphasizes the need for open communication: “Hold weekly conversations with all employees to make sure everyone is on the same journey.” Besides, he advises other Startups looking to expand their business to other regions to find local accelerator programs. “They can be a great partner for soft-landing as they usually have contacts to local experts, regulators, investors, lawyers as well as potential clients.”
Sonect had participated in the first batch of our P2 “Prototype to Product” program tailored for international Startups with prototypes in FinTech, RegTech and InsurTech. The application form for the sixth batch beginning in August 2020 in Zurich is open. For Startups in Asia, F10 launches the P2 “Prototype to Product” program Singapore in 2020! We are now accepting applications for this Startup Program beginning in May 2020 in Singapore.We will provide an overview of our P2 “Prototype to Product” program and answer questions about the F10 Startup Program in Zurich and Singapore during the F10 Consulting Hours. Find the next Consulting Hours here.