Founder Spotlight: Anne-Sybille Pradelles, Formance

 

What led you and your co-founder to start Formance? 

Anne-Sybille: We set out to build a company in the Summer of 2021 when we were part of a Y Combinator batch. My co-founder, Clément Salaün, had the idea for what became Formance because before he had worked at a marketplace called Selency. He was among the first employees, and he was leading payments, and designed and scaled systems, processes and teams that operated multi-millions worth of transactions in real-time.

Clément was already working for instance with Stripe and buy now, pay later providers. And he found that when it comes to building complex money flows between pay-in and payout, when you are a marketplace or more broadly, a money-moving business, like a vSaaS or fintech, you have to build it yourself. It’s custom and sophisticated, there are complex splits between pay-ins and payouts powered by critical in-house code.

For instance, if you are Uber Eats, each time you receive a payment through Stripe or PayPal, at the end you have to split each payment between the restaurants and the delivery service. You take your commission. You have to take into account discounts, vouchers, etc. 

At Formance we are building this missing link between pay-ins and payouts and productizing what Clément started doing at Selency. 

At the time, I wasn’t working in the payment space, I was COO of a cyber security company called Alsid. We grew the company from zero to 10 million annually in revenue, and from three to 120 people in four years. We were acquired by one of the largest US cybersecurity vendors, Tenable, for 100 million. So on my end, I had already experienced high velocity growth at a startup. 

I am CEO and my co-founder, Clément, built the product and is CTO. That’s how we decided to build Formance together.

 

What is the most important step for building an enduring company?

Anne-Sybille: To have a lasting impact, the first pillar is about the value you provide through your product or service. It’s better to build a painkiller than a vitamin. I experienced this at Alsid and now at Formance.

I would say the second pillar is around the team. At the beginning you must have a really strong founding team, because if you don’t have the right foundation, from an engineering perspective, operations perspective, etc., at some point, maybe after the series A or B or C, when you scale your product and organization, or grow from a geographical perspective, it will be super painful. 

I liked the decisions we made at Formance, to keep a lean and super efficient team, embed a lot of AI and have a super strong tech stack. 

I like the concept of having a super efficient team in general, because at the end of the day, you will be more resilient, which is important given everything we have seen these past few years. 

 

How are you thinking about global expansion?

Anne-Sybille: It was in our DNA to be global from day one. We have an open source approach, meaning that our product is available for free on GitHub. Everyone in the world can test, play and implement Formance. For the first two and a half years, we gathered a lot of data from potential customers.

At the time we raised our Series A around 40% of our annual recurring revenue was coming from North America, even though we are based in Paris. Our second market is Europe, driven by the UK, France and Germany. And our third market is the Middle East, driven by Egypt and Dubai. 

We are on paper a FinTech company. But we are not touching the money or in the flow of funds. We are a software layer, a data layer. We don’t have any constraints when it comes to geographical expansion, because we don’t need a banking license, or payment license, to operate. 

We didn’t think much about it, because even at the very beginning of our journey, we started speaking with so many companies based all over the world, and early on decided to embrace this global motion. 

Rather than expansion, we talk more about geographical focus, because we have customers and prospects worldwide. We are doubling down on the US, and then we’ll double down on other markets. As a startup you have to be focused.

 

What is the hardest thing about building a company?

Anne-Sybille: It’s super key to find the right co-founder or co-founders. For me, it’s the number one success factor. 

You can accomplish many things with a co-founder or co-founders with complimentary skill sets. My co-founder is the best when it comes to financial infrastructures, further roadmap, like he’s the best. My scope is more toward operations and fundraising. We raised our Series A last year, 21 million in two months from the very beginning to the very end. We have a clear separation of concerns, and full trust; I trust my co-founder 200% and vice versa.

I would say the second hardest thing is to find your product market fit. It can take months, even years. Sometimes you have to adjust your pitch or your product. Just validating your product market fit is really draining because you don’t always know if you will be able to remedy the next issue to reach your product market fit. From a mental load perspective it’s pretty intense.  

 

How did you come to meet Hoxton Ventures, and what has been your most memorable moment in your partnership with Hoxton?

Anne-Sybille: It was my co-founder, Clément, who first met Hoxton Ventures. We started working with Rob Kniaz, and he was amongst the firsts to believe in what we’re doing. We were really the first company to build a programming language designed to execute complex flow of funds—which was definitely not an approach you would see every day on the market. This type of product approach is really hard to build technically, but once built gives you an unparalleled and infinite potential for a global-scale adoption. Rob quickly understood this potential, visions aligned and we quickly decided we wanted to move forward with one another in this journey.

So when Clément was raising the first round, Hoxton Ventures wrote the largest check. We have found many times that Rob is really technical so he can get really, really deep in our product. Or go to market motion and since we are open source we are targeting developers. He really understands the big picture, including product but also GTM, the engineering community, and building large-scale enterprise software products.

 

Any advice for founders raising capital right now?

Anne-Sybille: It’s tough right now. It’s really different from 2021. Last year, we raised 21 million, led by PayPal Ventures and Portage, from beginning to end in two months. Momentum is key. 

I have two perspectives. The first one is you have to have strong traction and KPIs, you have to be solid enough to benefit from your annual revenue outcomes. Right now, in the current context, solid foundations matter, and are usually related to revenue metrics. 

Beyond revenue metrics, for us it was key to have big logos. As we earned our first annual revenue last year, we had big customers such as Doctolib, Liberis and Booksy, all established companies. It was key to investors that we demonstrate we are able to address enterprise segments. 

On the other hand, you have to analyze signals around you. We started to be pinged by investors last summer, because they had heard that we were having  pretty good traction. When you have the attention of investors, the window is really small. If you feel this momentum, you have to go for it. So we decided to launch our Series A process, because on one hand, we started having a really strong foundation, and on the other hand, we started seeing really good signals from the market. So we’re like, okay, let’s go launch our Series A process. So yeah, that would be my advice.