The Big Exit Show: Selling neobank Holvi and reacquiring it – the founder story of Tuomas Toivonen


The Big Exit Show: Selling neobank Holvi and reacquiring it - the founder story of Tuomas Toivonen cover

When Tuomas Toivonen realized there was no banking service that would help him run his business, he didn’t just sit around but founded neobank Holvi together with Kristoffer Lawson, Mikko Teerenhovi and Teemu Hukkanen. They did this around the same time when Ali Niknam founded Bunq and even before other neobanks were started like N26 and Revolut. That’s truly the entrepreneurial spirit we like at Peak 👏

In The Big Exit Show, he reveals how he and his co-founders became true FinTech pioneers 🚀

Some of the juicy learnings shared in this episode:

  • How you can make the best out of a bad situation when you have to let go of some staff 😇
  • How to decide between VC investors versus Strategic investors 🤔
  • What it is like to sell your company to a multinational to work as a subsidiary… only to buy the company back 5 years later 💪
  • Why it is sometimes necessary to quit activities in one region and focus on other markets 🌎
  • And of course… our estimation for how much Tuomas sold Holvi and for how much he reacquired it 💵

In this podcast series Peak’s very own co-founder and managing partner Johan van Mil, and podcast-host Remy Gieling talk to successful European tech entrepreneurs about the exit of their company.

You can find the episode on your favorite podcast platform, linked below. And, if you are really interested in listening to the big exit of specific founders – reach out to us so we can invite them for the next episode!

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You can find the transcribed version of the episode below:

Tuomas: What is always good startup advice is; what’s the initial service that you roll out to customers, just make that work first really well before expanding to other areas. We listen to a degree, but we build a broader product than maybe the conventional wisdom would have suggested.

Remy: Starting a company, that’s easy. Selling your company, that’s a whole different story. And in The Big Exit Show by Peak, we lift the curtain of secrecy of selling ambitious scaleups by talking to successful founders who have been in this roller coaster. My name is Remy Gieling.

Johan: And I’m Johan van Mil.

Remy: And in this episode, we are in Helsinki to talk to Tuomas Toivonen. About 10 years ago, Tuomas decided to build a radically better banking solution from scratch. His company, Holvi does banking, invoicing, and bookkeeping for solo entrepreneurs, freelancers, and small businesses in Finland, Germany, and other European markets. In 2016, he sold his company to the Spanish [00:01:00] multinational BBVA, only to buy it back in early 2021. We’ll talk to him about starting, scaling, selling, and reacquiring the company. Thanks so much for having us, Tuomas.

Tuomas: Thank you. Thanks for having me.

Remy: The one thing I found on your LinkedIn profile is that you started your career way back in Syria. How did you end up there?

Tuomas: I’ve been an entrepreneur from the beginning of my working career. I started the first company right after high school. Then my only employment that hasn’t been with a company that I founded is that I worked with a Finland-based security and networking consultancy in 2005-2006 where we built a new countrywide backbone for Syria. So the government wanted to really bring internet to the country. Then once that was built, someone was needed to help them run the network. [00:02:00] And I ended up in that very, very interesting job for a year and a bit, living in Damascus and helping to run the backbone network in Syria. So very interesting times.

Johan: How was it living there in Damascus?

Tuomas: Very, very nice. Of course, that was some years before the Arab Spring. And of course, the situation is very, very different.

Johan: Yeah.

Tuomas: Different now. So at that time, very nice culture, very nice country. So it was really amazing, too, to then also, on the weekends, to see a lot of Syria and the neighboring countries, Lebanon. Beirut, of course, is an amazing city. So–

Johan: Nice.

Tuomas: –good times.

Johan: Good year. Hey, Tuomas, what is the heroic story behind Holvi?

Tuomas: Well, the heroic story is, the background is that we all were and are entrepreneurs. And we really didn’t have a banking service that would help us run our businesses. And we saw the need in the market, a service that we [00:03:00] would use. We also had a long background in non-profit activities, and also, event organizing. I was, for a very long period, the treasurer of something called the Alternative Party. They were organizing the largest digital media festival in the Nordics. And we had built a lot of software to help run these event activities, the finances of an event, invoicing sponsors, selling tickets, all of that. So basically, we had a little bit of our own software that we’d built for different use cases. We had good software to run non-profit activities. But then in our business lives running small businesses, we didn’t really have anything comparable that would help us run the business.

And around that time, the euro and the SEPA payment region was already set up. So we looked at the market that “Hey, here would be something that we could build on, not just in Finland but on a pan-[ 00:04:00] European basis.” And also at that time, PSD1, first Payment Services Directive– now, there is a lot of talk about open banking and PSD2 but PSD1 brought to the market a new way to be regulated so that you could offer a service that provides the functionalities of a traditional bank but a little bit lighter regulation, easier to get started, and less capital requirements as a payment institution. So it was the software, changes in regulation, changes in the payments market, that we really looked at the scene and decided that since there is no banking service for small businesses and that there is these structural changes in the market, we can actually build this ourselves. So we were really the first customers of the service–

Johan: Indeed.

Tuomas: –ourselves, so very easy to do get to a good product-market fit because it was really like, [00:05:00] “Okay, does it work for us to run businesses?

Johan: Yeah.

Tuomas: If it does, it works for others on these small businesses as well.

Johan: So you solve your own problem and use the changing legislation, also the changing technology in the market at that time, right?

Tuomas: Exactly.

Johan: That’s interesting. And that’s a heroic story. What’s the real story behind Holvi? Because as we all know, as entrepreneurs, it’s different to run a company because– what was the real story for you?

Tuomas: [chuckles] Starting in 2011 and the first era of Holvi from 2011 to 2015, really being a pioneer in fintech, being the first business to business neobank on the market. It’s always great and interesting to be a pioneer from a business perspective. You probably don’t want to do that. I mean a good example– Google was not the first search engine. There was a number of search engines before. And we don’t hear that much about those pre-Google search engines.

Remy: The AltaVista [inaudible 00:05:58].

Tuomas: So they were maybe a little bit [00:06:00] early. So we were also very early to the market. And these days, if you get started in a lot of payments or neobanking, you have banking as a service platforms available.

Johan: Indeed.

Tuomas: So you don’t have to build everything from the ground up. So we had to really build everything from the ground up, whether it was a technology, regulations, payments, and banking partnership. So it definitely wasn’t easy but definitely interesting. And like with all startups, you always have this, right in front of your nose, an existential problem that “Okay, here we’ve got this thing that is going to kill the company.” And then you work to solve that problem. You get it solved only to realize that “Okay, that was just the visible part of the iceberg, that then there’s the next problem–

Johan: Indeed.

Tuomas: –that then becomes existential. And you always think that “Okay, if I solve this one, then it’s smooth sailing,” but it never is.

Johan: Indeed, [00:07:00] yeah.

Tuomas: There’s always the next problem. And that’s just part of an entrepreneurial journey. You just have to get comfortable, that is never solved. You always have the next problem to solve. And if that’s not your cup of tea, then well, maybe you shouldn’t be doing–

Johan: Yeah, maybe you do it then.

Tuomas: –the entrepreneurship business.

Remy: So our listeners are all over Europe and beyond. So they don’t maybe all have a Holvi account yet.

Tuomas: Yes.

Remy: So can you tell us what makes Holvi different from other neobanks like N26, Revolut, or bunq?

Tuomas: Sure. The first thing that makes us different is that our focus is fully on serving small businesses. So we don’t serve consumers. So the sweet spot for the Holvi service is really from freelancers to companies up to 50 persons, so mid-sized SMEs. What makes us also quite different from other players is that it’s not just the bank account and the cards that you get but as a small business owner, you get [00:08:00] the end-to-end service. So you get all the facilities to collect income. So you get a full invoicing solution including electronic invoicing. You get a full online store included in the mix, so you can, in 15 minutes, be online and selling physical or virtual products or services.

And we bring you all the payment methods. So set up your online store, you’re up and running selling products. No Shopify needed, no Stripe needed. It’s all integrated into the Holvi online banking interface. So really, end-to-end facilities to collect the income but then also a full set of services to manage expenses. And then of course, we tie the income and the expenses with a comprehensive cash flow dashboard so that the entrepreneur really sees, at all points in time, how their business is doing.

And then as a new service that we now have for a cohort of pilot customers, but rolling out in the coming [00:09:00] year at a larger scale, is that we also now have credit services in the mix starting out with a credit card offering in Germany and Finland initially for freelancers. But you really get the full service. And we also give you credit for those events where either you want to grow your business with credit or you have a cash flow crunch, and you need a little bit of help to tidy over that.

Remy: And to play the devil’s advocate for a second, why are you so evit [00:09:30] on not taking on consumers? Because in my experience, for example, I bank with bunq for a long time. And they do business accounts and personal accounts. And for me, personally it’s very convenient that I have it all in one app but there must be a very good reason why you decide that “We don’t do consumers.”

Tuomas: It all comes down to the focus. Of course, if you look at freelancer customers and consumers, there is a bit of an overlap. It’s not [00:10:00] that clear line but we really want to focus on the business use cases. If you’re a consumer, in some cases, yes, but you don’t usually have the requirement to invoice other folks on a monthly basis. I mean you receive your salary on your account, and that’s your income. So the needs are quite different, and we really want to keep the service focused on business customers. And then when we see N26, Revolut, a lot of these players that started out with full consumer focus bringing a little bit of the business focus into play, but then at the end of the day, their offering is often a little bit tailored to business customers, which isn’t then fully purpose-built for business customers. And that’s what we are all about.

Johan: Yeah, so the right product, right? [00:10:50]

Tuomas: Exactly.

Johan: That’s also what I can recognize on that end. Hey, how hard was it for you to get the regulations sorted out, and especially also those days?

Tuomas: Yeah. I mean [00:11:00] it was a challenge. And of course, it was very early into PSD1. So when payment institutions as a regulatory category was very new, we were one of the first ones here in Finland. So it was hard to define the legal assistance because no one had really done this before. So what we ended up doing was really going to the source, starting to build from first principles. So just go read the EU directives, read the Finnish laws, of course, very close to the directives but really understanding the space super, super deeply ourselves so that we could then explain our business in the right regulatory terms.

And that’s something that– I mean it’s gotten easier these days with banking as service platforms where a new company doesn’t necessarily need to understand that deeply [00:12:00] the regulatory background but I would really recommend any authentic entrepreneur to just do their own research in a sense, read the laws, understand that from the ground up. If you just rely on legal advice, it’s very costly-

Johan: Indeed.

Tuomas: –to begin with, but then you’re not able to challenge any of the orthodoxies of what can be done and what cannot be done. You really need to understand it yourself. Laws and regulations maybe isn’t the most exciting reading but it is human readable.

Tuomas: You don’t need to be a lawyer to read laws and regulations. And every fintech entrepreneur should do that.

Remy: Yeah. Yeah. So what were some of the responses from the people around you when you told them all the way back into 2011 you were maybe starting a bank, which sounds wacky?

Tuomas: Yeah. [00:13:00] That wasn’t such a big thing. So banking goes in the family. My father had a very long career in banking including being in the founding team of a Finnish bank. So it wasn’t– I’d seen the process around me, so it wasn’t really that starting a bank is something weird. It just seemed quite natural, really.

Remy: And did you take some lessons from him? Because he’d done it before, of course, in a whole different industry, maybe.

Tuomas: No, I’ve–

Remy: –at a different time?

Tuomas: Absolutely, absolutely. And his advice and what is always good startup advice is like, “Okay. Focus, focus, focus. What’s the initial service that you roll out to customers, just make that work first really, really well before expanding to other areas,” all of that. We listened to a degree but we build a broader product than maybe the conventional [00:14:00] wisdom would have suggested. But I think that was also the right thing to do from the get-go because we didn’t want to solve for the small business customer that “Okay, this is just your ticket sales solution or your invoicing solution.”

We really wanted to bring the whole set of services that a small business requires into one so that the business owner can really focus on their business. And our earliest customers were very much from the health and wellness segment. And for these folks, we really wanted to help them focus on what they do best. So if you are an independent yoga teacher, that’s what you know what to do. You’re not in the business of business management. And we really felt that we need to give a comprehensive solution to them.

Johan: I can imagine also given the completeness of your offering that it’s for companies, which already have an existing [00:15:00] offering for invoicing, et cetera, it’s hard to sell your product, right? So I assume that a lot of your customers, especially in the early days, we’re starting yoga schools, starting massage [unintelligible 00:15:10], et cetera, right?

Tuomas: Yeah. I mean there was, of course, a lot of customers that were just starting up but also, there was– and a larger set of customers was really people who had been in business for a while but maybe, their business was growing or they otherwise wanted to really professionalize their business, so maybe they had started in business and then they just Googled invoice template in Excel. And then they were just really doing things super, super manually, creating invoices in Excel, sending those manually. Then tracking whether they’ve got the payments or not. And our offering really resonated for them that “Okay, for one, it’s super, super much faster to create your invoices. We deliver it automatically, track it for you, whether it’s [00:16:00] paid or not. If it’s not paid, reminders are sent.” So we really take a lot of the load off the entrepreneur like, “Okay, I want to automate this. I want to make this better. I want to focus on the essential.”

Johan: So Tuomas, how did you fund the first period of Holvi?

Tuomas: Yeah, I mean the first five years, the early years, and very really early years in fintech as well, so we were funded first by angel investors in Finland and in other Nordic countries. And many of the angel investors were from the financial sector. So they were very helpful as mentors as well, as well as making connections. Then in 2014, we got the Austrian venture fund, Speedinvest as our seed investor. And they, of course, were one of the earlier funds with a fintech focus, so really were a good [00:17:00] asset to have on the table. And actually, our first overseas market or outside Finland was actually Austria through the connections.

Johan: Of the Speedinvest?

Tuomas: So they really helped us land on the new market and to realize that banking is done quite differently in different European countries. And we have a lot of localization ahead of us.

Johan: Yeah, indeed. Yeah.

Remy: What was your revenue model back then? Because for a long time, a big part of the product was available for free. So how did you get people to– get them to pay the salaries?

Tuomas: Yeah, I mean, actually in the earliest years, we had no free services. Everything was paid. That was then only a little bit later when we started to offer a free package. In the earliest years, it was really– we charged four payments, payments processed. So you did get the current account and all the other facilities for free but every payment, incoming or outgoing, we had a fee whether it was e-commerce [00:18:00] payments or just bank transfers, we charged on a per payment basis.


Remy: The growth phase. Tuomas, when did you notice that you were really starting to get traction with the company? Can you take us back to that moment?

Tuomas: So for us, of course, the early years, what really worked well for us was getting these beachhead customers in certain specific segments. I already mentioned that the early customer traction came from the health and wellness segment. And what really worked for us was in each segment, to get one or two really visible anchor customers– so for example, we had the leading salsa dance instructor in Finland as a customer. And just having this one [00:19:00] customer allowed us to build quite a large customer base around that particular area.

And what was maybe the key learning there was that if you are a dance instructor, you’re probably not an expert in banking but if you provide for this person a service that helps them succeed in their business, makes it easier for them to run their dance studio. I mean these folks speak to other people in the same vertical like dance instructors speak with other dance instructors. And if you have someone who is respected in the field, then other people in the same vertical, they will listen because you have the professional credibility even if you’re not a banking expert.

Johan: Yeah. Indeed. How did you get these lighthouse customers on board in the different segments? Because I can fully imagine that it [00:20:00] really helps to get new clients in the same sector on board. But how did you get these first clients on board?

Tuomas: I mean it was really going to all kinds of events. Well, maybe sometimes, we forget what the world was like pre-COVID. You actually went to see people in person and just one of the co-founders, Christopher, he was really our evangelist. And he was basically on the road all the time, all around Finland. So it was really community building.

Remy: Spreading the word.

Tuomas: Exactly.

Remy: And did you also do affiliate marketing then to incentivize these people to bring in new clients?

Tuomas: No, not really. It was quite non-digital. And this is like 2011, ’12, ’13. So really, really traditional grassroots, building-the-community type of customer acquisition.

Johan: Yeah. Hey, when did the competition come up?

Tuomas: The competition [00:21:00] only started relatively late. I mean the early years up to like 2015-2016, we were more or less the only player in town. So some of the European B2B neobanking competitors, like ’15, ’16, ’17 was only when these folks started to come to the scene. And of course, one big enabler was that the banking as a service platform started to appear then. So it became easier to build something where you focus on the UX, and let someone else handle the payment processing, then regulation, et cetera. Now fintech is everywhere but it’s often– and we forget how recent, in a sense, it is. Some of our earliest investors, when they invested in Finland, their colleagues joked, “Okay, so now you’re investing in Fintech, [00:22:00] as in Technology from Finland, not financial technology.

Johan: And how did you start expanding beyond fintech in Finland? How did you start expanding through other countries?

Tuomas: We got in in 2014 around the same time as Speedinvest came on as an investor. We upgraded our license from a registered PSP to a full payment institution, which then allowed us to use the so-called passporting process that we could passport our services all across the European economic area, which we promptly did. And then we started first in Austria, and actually, Austria and Ireland. Then later, went to Germany, which is our largest market now by far, as well as open services in some other European markets where we are present too today as well.

Johan: Yeah, apart from Speedinvestors, of course, located in Austria. But for me, as an investor, it’s not a very logical [00:23:00] market to start given the size of the market, et cetera. What was, for you, the reason apart from Speedinvestors are there?

Tuomas: Speedinvest was one important factor and the help that they could bring us on the ground. So we, in collaboration with them, set up our first outside-Helsinki office in Vienna but also, we wanted to start with a smaller market and try the same customer acquisition models that we’ve done in Finland, replicate that model of really being on the ground, going to meet potential customers, be where the customers are. And we thought that it’s easier to do in a smaller market than going to Germany directly. Then we also had the idea that “Okay, we learn about the DACH region starting first in in Austria, then expand to Germany. Of course, there we [00:24:00] were a little bit naive. And the lessons from Austria to a degree, yes they translated to Germany but to a large extent, no. So maybe it would have been better to go to Germany from the beginning.

Johan: Yeah.

Tuomas: But it was still a good learning as the first non-whole market–

Johan: Indeed.

Tuomas: –and starting a little bit smaller market.

Johan: Put your toe in the water and see what happens, right?

Johan: Yeah.

Tuomas: Exactly.

Johan: Yeah.

Tuomas: Exactly.

Remy: The company also moved to the UK for a while but I think, at one point, you decided to not focus on that market anymore. What were some of the reasons behind that?

Tuomas: Yeah. I mean UK, of course, is a super interesting market and a market where a large segment of the economy, there’s a lot of small businesses, a lot of sole traders, so structurally, very attractive. And of course, a big market along with the other big European markets. So we did roll out our services in the UK, build it to actually quite nice cohort of early customers. [00:25:00] Back in summer 2020, so a year and a half ago, we had this decision point to make that now we have this early traction, if we’ve done the learnings in the UK market, now would be the time to really invest in the market, grow in the UK but that was unfortunately also the time of highest level of COVID uncertainty. No one really knew how things are going to develop.

And we knew that we then need to– if we went all in the UK, we’d need to get separate UK license. So in in that sense, it would have become a much more complex market than just any EU or EA market. So at that point, along with our parent company, we decided that “Okay, now is not the right time to invest in the UK.” And then we [00:26:00] looked at the option, “Should we keep it in the UK at this subscale level, and then maybe expand from that?” but decided that “No, it’s better to do a clean break with the market and focus on the EU market.”


Remy: The exits and reacquiring phase. So in 2016, you decided to sell the company. First, take us back there. What was the reason for you to decide to sell at one point?

Tuomas: As I mentioned, the 2011-2015 period, the early years of Holvi, very early to fintech, and also very early to fintech financing, and also, a lot of the supporting infrastructure was in early stages. So we really felt that “Okay, to build this company to its maximum potential [00:27:00] is probably going to take a little bit longer than expected. It’s probably going to cost a little bit more than expected, and it was a good question that “With all of the uncertainty in a very nascent industry, is this a good VC case?” So we had reasonably good investment offers but then, we also had two very interesting strategic offers on the table. And then in collaboration with our investors, we decided to take one of those strategic options. So then in early 2016, we joined the Spanish banking group, BBVA as a fully owned subsidiary. So they purchased the company.

As a team, we stayed on and very much continued to run the business as a separate entity. I mean we had our own licenses, our own technology, [00:28:00] our own partnerships for the payment processing. So in a sense, we continued to operate very much independently, of course, with very, very strong board. And from a compliance side, oversight from the parent company, and of course, a strong strategic alignment between us and the parent company. At BBVA, we were part of a unit called New Digital Businesses where there was us, and for example, Simple, a consumer neobank pioneer from the US, was one of the other portfolio companies along with [crosstalk 00:28:40].

Johan: One of the first, right? One of the first [crosstalk 00:28:41].

Tuomas: They were definitely a pioneer on the consumer side. And they joined BBVA 12 months or so–

Johan: Yeah, it should be before it. Earlier than us.

Tuomas: Yeah.

Tuomas: And we knew from the past, Josh and Shamir, the founders of Simple. So that was also a very good reference for us. And we [00:29:00] talked with the Simple founders before deciding to join BBVA. It’s always good to get the inside story as well because you never know with large corporates how they work with smaller companies.

Johan: Indeed, reference calling– reference checking is very valid from that moment, right?

Tuomas: It definitely is.

Johan: How did you get to this moment? Because you mentioned you had a few options from VC. You had a few strategics on the table. My own experience on that field is that it’s pretty hard because on the one hand, you’re talking to a VC, you have a story about growth. And then you have also story to strategics. And it’s more about integrating your company and working together with strategic. How did you, at that time, manage that process also; and one, from a professional level. So who did you hire to help you with that; but also, on a personal level?

Tuomas: We, of course, had good advisors for the process, a UK corporate finance advisory company [00:30:00] called Strata Partners, because in a way, you were running two processes simultaneously. And there was a lot of the same goals with the processes because even with the strategics, it was not about really integrating the company but keeping it running as a very autonomous unit pioneering new markets, pioneering new customer segments, new ways to deliver financial services. So from that sense, it was not to wholly separate processes, but of course, it was doing two things at once.

Remy: Yeah.

Tuomas: And it was really, really helpful to have advisors for that that process as well.

Johan: But I can imagine also for you, as founder, it’s more or less, two different stories, right? Because one, indeed, it’s VC money, so very aggressive growth. And the other is more strategic, is more indeed other markets but of course, turning to profitability in a certain moment, right? Working more together with the companies. How was it for you, on a personal level, to have [00:31:00] these two different stories on the table?

Tuomas: Yeah, for us, as the founding and management team, the strategic option was– I mean we really felt that we’ve gotten far as the pioneers in the space but we’ve seen enough to realize that yes, this is probably going to take longer than we expect. This is probably going to cost more than we expect. Well, I mean, both of those things always happen with every company.


Tuomas: But anyway– so for us, one of the attractions of a strategic investor/owner was that it would give us the time frame, the longer perspective to build this business with the patience that we felt that it probably requires rather than an ABC investment, where– built frantically for 12 months, and then you’re on the fundraising time again.

Johan: Yeah. What was the view at that time from the investors [00:32:00] of Holvi at that time? So he had Speedinvestment board, also some business angels, as mentioned. You are yourself a founding team running the business.

Tuomas: Yeah.

Johan: Sometimes, that means also, my own experience, as a different view because everybody has their own motivation, what was the view at that time of the investors?

Tuomas: For that, we also need to, a little bit, rewind back to what the fintech investment landscape was in 2014-2015. If you look at it from today’s lens, and especially, second quarter, third quarter this year, the fintech financings that we’ve seen, it’s easy to forget how completely different it was back then. The sums were so much smaller. Almost everything was still unproven. So whether you could even build a challenger bank was just completely unproven. So from the point of the existing and potential new investors as [00:33:00] well, it was maybe slightly early days to make a significant series A investment and build from that. So for all parties concerned, a relatively good strategic exit was an attractive proposition.

Remy: At what point came the idea that it might be a possibility to buy back the company?

Tuomas: We spent very, very good years under BBVA. We grew the company a lot. At the time of the sale of the business in 2016, we were like 15 people. And we grew that team to about 10x over the following five years. We built the whole presence in the German market. Basically, we really built the international footprint under BBVA. And the rationale that we had when going into joining BBVA, that “Hey, this requires resourcing. [00:34:00] This requires time to build,” I think we were right about that. And it was very, very good to have a large parent company that could support that internationalization and patient growth of the company.

Johan: How was it for you personally? Because you mentioned already that you never worked for a company apart from your own companies, and now, you had to, let’s say, work for a Spanish fintech banking giant. How was it for you personally to make the switch?

Tuomas: It was okay. As a company, we stayed very autonomous throughout the years, of course. We had the parent company folks on our board, very much involved on a strategic level, setting the overall goals. But operationally, we continued very much as before and had the room and the leeway to put our effort into the business, and building the business, and [00:35:00] the culture of the company stayed very much as it was before. So the very strong culture of Holvi as Holvi.

Johan: So that stayed the same, right? But I also can imagine indeed that the banking giant has its own processes, rules, the way they work–

Tuomas: Of course.

Johan: –governance, et cetera. What did change from that moment on?

Tuomas: Of course, from a compliance and governance point of view, things did change over the years but in very many ways, that was a good thing for us. Yes, we were like 15 people, a regulated player already at the time of the acquisition. But of course, a company of that size from a governance-compliance perspective, we were still a little bit raw around the edges. So in terms of becoming a real solid financial institution, it helped us a lot to be part of a larger institution. [00:36:00] And in a sense, of course, being regulated, so you have the regulator to answer to but we almost had a second regulator from the corporate side. But all in all, that was super, super good for the company in building, or really maturing the company to where we are now. And of course, now, it has given us this really great base to build on for the future.

Johan: Yeah, but it also meant that the company in size grew from 15 to 150 people, right?

Tuomas: Correct, yeah.

Johan: So I think also, for your role as a CEO and as a founder, it changed. How was that for you on a personal level also to manage the growth of a company, especially regarding staff?

Tuomas: Yeah. So personally– I was the founding CEO throughout the BBVA years. So I was in different roles, so not as the CEO but all around. For me, personally, it was actually quite interesting to be able to see [00:37:00] all kinds of areas of the company, and experience the growth of the company from a lot of different angles. And of course, as they always say, whenever the head count of company doubles, everything breaks. You got to structure everything again because the previous communication patterns just don’t work anymore. And going from like 15 people to 250 people, we went through that process two to three times where it just felt that, yeah, everything that used to work is not working anymore. Really interesting to see that growth story from the inside and from different roles.

Remy: So I want to go back to the reacquiring for a moment. At one point, someone has to send an email or a phone call or a Zoom link with the idea–

Tuomas: Or a coffee chat.

Remy: Or a coffee chat, with the idea that it might be possible to reacquire it. Who brought [00:38:00] up the first idea? How did that situation go?

Tuomas: So of course, 2020 was a big year of changes all around the world, like COVID, and all the changes that brought about. And of course, at many companies, bringing a renewed focus on “Okay, what’s the core– what are the initiatives that one wants to do to focus?” So that brought some changes in our operating environment. Then of course, at our parent company, some big changes happened like after summer in 2020, the US business of BBVA was fully sold. And along, of course, with the US business, a couple of our sister portfolio companies were sold as well. So Simple, that I mentioned earlier was sold at that same point. So then in a way, as [00:39:00] part of this new digital businesses unit, all of it was the only big company as part of that portfolio. And then with BBVA, we started to look at like, “Okay, this has been a really good place for Holvi for the past five years but now, with all of these changes, is this is still the right place for us?”

Remy: Yeah.

Tuomas: A lot of discussions around that, discussion in different options but then, myself and the core management team, we put on the table that one option could be that we do a management buyout. And then we, in December-January, negotiated the parameters of that agreement and reached a mutually agreeable conclusion. And since the start of February of this year, we’ve now been a fully-independent-team-owned company.

Johan: And what were the other options [00:40:00] you were considering at that time? Because one of the options was indeed to buy back Holvi, but what are other options you were considering, or BBVA was considering?

Tuomas: Well, most of that, of course, is under quite extensive NDA.

Johan: Okay.

Tuomas: So can’t really go into all the options but of course, it’s always good to consider options with–

Johan: Different ones, yeah.

Tuomas: Out of all the options.

Johan: Yeah.

Remy: Tell us what it was because I can only imagine at one point, you discussed the possibility of reacquiring the company with your team. It must be very exciting to, once again, be the sole founder– or no, that’s–

Johan: Yeah, it feels–

Remy: –with the founder.

Johan: I had a company myself, which I sold and also almost bought back. And then 2009, the banking crisis happened. And then I really literally, at the notary, I pulled off, so to say. So I personally experienced this. You get a lot of strange feelings also on that, right?

Tuomas: Yeah. Of course, it was not something to take lightly. And of course, we’d had had [00:41:00] very good support from the parent company for the past five years, and a lot of resources. And now, of course, starting on our own would mean that none of that resourcing would be available. So we would truly be on our own again. And so that’s definitely not a step to take lightly. And of course, we did our due diligence with the core team in making sure that if we do this MBO that the entity– that we have on our hands, that it is something that is sustainable that we can make into a company for the long run, and based on that– and of course, since we’ve been part of the operational team, the due diligence was quite straightforward because we knew the company.

Remy: Yeah, from the inside.

Tuomas: Exactly. And we knew that what changes we’d need to do to put the company on a solid [00:42:00] footing. And we knew that having the flexibility of being fully team owned, we could do the kinds of decisions, also for the whole team, it’s been a really, really hard year–

Johan: Yeah, can imagine [00:42:13].

Tuomas: to put the company on solid footing, both in terms of reducing costs very, very significantly–

Johan: Yeah.

Tuomas: –and then also doing the kinds of things that we needed to do to increase revenues very significantly.

Remy: I read somewhere that almost half the staff had to be laid off, and you changed the business model to a full paid model which cost like a 17% churn, which is quite all right, actually, if you want to get people on board for paying for your product. What was it like, those two major changes?

Tuomas: In terms of reducing cost to put the company on a solid footing, we had to reduce the team quite [00:43:00] significantly. So we went from almost 150 people to around a little under 70 people now. So about half the size of the team. That was, of course, really hard for all the team members that had to leave, as well as, of course, for all the team members that stayed because, of course, a lot of colleagues leaving. And of course, the workload, it only increased. So we’ve done even more than we did in the past but with half the team that we have now. So it certainly hasn’t been an easy year for anyone. And it’s been amazing how well the team has pulled together, and how much everyone’s really achieved. But of course, the spirit of being– or what we call, in the Holvi being independent again, so that has really helped everyone really focus on the task that “Okay, let’s get this company on a solid footing.”

Remy: How did you [00:44:00] explain it to everyone? Because you’re buying back the company, and you had to explain there was going to be significant cuts in cost. How did you convey that to all the staff so that they know what’s going on, and that they understood why it was necessary?

Tuomas: We’ve always been very open with our team on the financials of the company. So everyone knew that to put this on a solid footing, we would need to get the cost base in better shape. So everyone understood that. But then, we also invested a lot of time in our placement activities to make sure that everyone who couldn’t continue with the team found a good new employment opportunity. And what was actually, on a personal level, great for me to see is that for a lot of people who left Holvi, it was great to see that the [00:45:00] new company’s new positions that they went to, it was a very clear step up on their career that this experience that they’d had at Holvi where you’d really seen payments and banking from the inside on a way wider scope than you would see if you’re at a big traditional bank. You just get to see a small sliver of the business off of a bank. Whereas at Holvi,, people had seen, and actually had a very wide scope of responsibility. So that helped for a lot of folks really make a step up in their career.

Johan: Good to hear. Very impressive how you did that indeed, going from a founder starting a company, buying it back, letting indeed also people go. It’s also really tough decisions. And what are your plans and ambitions for the future, because I read somewhere, I think, in a Finnish publication probably, or TechCrunch–

Remy: It was on

Johan: It was on Thank you [00:46:00] for that, Remy. That’s my vision plans even for an IPO in the future. What’s your vision for the future for Holvi?

Tuomas: The company has now gone through two five-year periods. So first, we were like five years as a fintech pioneer. Then five years under BBVA. But now, we’re on our third five-year plan or maybe a more, in Star Trek terms, five-year mission to explore the strange worlds of fintech. But yes, now as an independent entity, the next five years, we definitely see ourselves, at the end of that process, being a leading neobank in core European markets for business customers, and most likely, not only a neobank but a bank-bank at the end of that period. And of course, a natural path at that point would be to also be a publicly listed company [00:47:00] but that’s some years in the future.

Johan: Indeed.

Tuomas: Maybe in Sifted, it was a little bit too prominently–

Johan: Too prominent, yeah.

Tuomas: Indeed, in the headline. Our real ambition is–

Johan: Yeah, and probably going to raise funding also to get to this phase, these next five years, as you mentioned?

Tuomas: Absolutely. So now, our focus has been to put the company on solid footing, and put it in a place where it makes sense to then raise growth funding, really, for the growth instead of raising funding to “keep the company floating.”

Johan: Yeah.

Tuomas: So–

Johan: Okay.


Remy: The valuation. So you can respond in any way you’d like.

Colleague from Peak: As Holvi was first acquired by BBVA in 2016, and then bought back again this year by Toivonen himself, we have to dig into two exit valuations this time. The purchase price that BBVA had to pay [00:48:00] for Holvi in 2016 was not disclosed but TechCrunch did some research to the acquisition already. With a told M&A agenda from BBVA, TechCrunch points out the acquisition of simply a US-based digital banking app that happened two years earlier. The amount was disclosed at 117 million US dollars, and simply could serve as a comparable pair to Holvi.

TechCrunch, therefore, guesses that Holvi was acquired for around or maybe less than 100 million US dollars. Although we have limited data to dig deeper into this guess, the transaction was listed in a fintech startup M&A report where the deal amount of 100 million US dollars, the equivalent of 90 million euros is confirmed. So now, fast forward five years, to February this year, 2021, the tech investment firm, Keru Fintech Investments, founded by Holvi’s co-founder Tuomas Toivonen acquired back all shares [00:49:00] of Holvi from the Spanish banking group. No information about the exact valuation was disclosed, so let’s do some guesstimations.

First, we use some public data to estimate the revenue. We know that in late 2020, Holvi had approximately 200,000 customers where we assumed that 150,000 were paying. By taking an average of their monthly subscription price at 6 and 12 euros to 9 euros per month, we get a turnover of around 16 million euros. Secondly, we looked at a comparable transaction to derive a revenue multiple ballpark. The French fintech company, Shine, focusing on SME banking solutions got acquired by Societe Generale in June 2020.

At that time, Shine had approximately 70,000 customers with an average subscription price of 16.6. Estimating their annual revenue at 15.5 million, Shine got acquired [00:50:00] for 100 million euros, which indicates a 6.9 revenue multiple. This seems about right when we benchmark this to public fintech revenue multiples, which were around 8 times by the start of Q3 2020 and 6.5 mid-2021. By then, using a slightly lower private multiple at six times the revenue, we now estimate a valuation of Holvi at 100 million euros, but not so fast.

Since the initial acquisition, the neobank market had turned way more competitive with players like Qonto, Penta, Revolut, and N26 popping up, and Holvi had just pulled out of the UK market. In addition, BBVA showed signs that they wanted to sell their neobank exposure by quitting Simple’s operations in January 2021.

Lastly, knowing that the failure rate for M&A sits between 70 and 90 percent according to Harvard [00:51:00] Business Review, it might not be a wrong assumption that everything did not go as planned after BBVA bought Holvi. So when the initial founder came knocking at the door, we expect that Holvi was sold at a discount of let’s say 70%. Applying this to the estimated valuation, we guess that Tuomas bought Holvi back at around 30 million euros.

To conclude, we think the founders sold Holvi for 90 million euros in 2016 and bought it back again for around 30 million in 2021. So Tuomas, depending on how good you are at negotiating, is the price we have estimated too high or too low?

Tuomas: I think that your estimations in both cases are somewhat too high.

Remy: Thank you very much.

Remy: Ladies and gentlemen, thank you so much for listening to The Big Exit Show. We hope you enjoyed today’s program. And if you did, please subscribe to our show on Spotify or your favorite podcast platform. And if you have any feedback, [00:52:00] please send us an email to [email protected]. My name is Remy Gieling.

Johan: And I’m Johan van Mil.

Remy: Thanks again for listening. And we hope you join us at the next episode.

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