Jan Lastuvka's interview | Lemonero

We always on the lookout for innovative products and services to support the needs of our corporate clients as economies become increasingly digitised. The explosive growth in e-commerce is one area where Societe Generale’s fintech strategy ensures we have a strong presence in providing banking services, directly and indirectly. 

A year ago, our subsidiary in the Czech Republic, Komerční banka (KB), invested in Lemonero, a start-up which harnesses the power of data analytics to offer alternative finance to e-commerce companies. It’s a great example of the pragmatism behind our fintech strategy because we recognise that in some areas fintechs are nimbler and more flexible than us. Partnerships make sense when time to market is critical.

Our year-old relationship with Lemonero is an exciting story of bringing a new financing solution to these growing e-commerce businesses and to scale it up in Europe. Lemonero’s Founder and CEO Jan Lastuvka and KB’s CEO Jan Juchelka tell me more below on how it’s been beneficial for all concerned and what lies ahead.

Tell us what Lemonero does, Jan Lastuvka?

Lemonero provides really fast and flexible financing to merchants through its partners, the payment services providers (PSPs) or the ecommerce omnichannel platforms and marketplaces where merchants sell their goods. The time between creating a contract to signing it and receiving the money takes less than 10 minutes. It enables SMEs (small or medium-sized enterprises) to grow by buying inventory or investing in marketing, for example, or for a seasonal business to manage its cash flow. 

We provide short term financing, usually for 12-15 months. Currently the average loan size is around €10,000. We use artificial intelligence to analyse a merchant’s financial performance from data provided by the PSP or e-commerce platform. Loan repayments are handled as a percentage of sales charged by the e-commerce platform or PSP. The interest rate margin we make on the loans is our core revenue stream.

How do clients benefit?

For our partners there are no development requirements. As an embedded finance solution Lemonero is super simple to integrate into their ecosystem through APIs (application programming interfaces) so they can launch the product in two to three weeks.

We’re tackling the two main problems merchants face in obtaining working capital. We score merchants using different data than banks to assess their performance, creditworthiness and risk. This may be a company that has been running for less than 12 months, say, or a seasonal business – both of which banks would judge as too risky. The second problem is the weeks it takes for companies to receive the funds and the need to go to the bank to apply for the loans. SMEs are time poor.

We’re giving merchants a new alternative source of funding while our marketplace or ecommerce platform partners gain a new product to offer their merchants, which enhances their brand. It's a win-win situation.

Where did you get the idea for Lemonero?

Ten years ago I sold a creative digital agency and set up six online stores selling products across borders in Europe – three failed and three were successful. It was a really important experience of the SME sector and after this in 2014 I founded MonkeyData, a SaaS (software as a service) data analytics platform for ecommerce companies.

We have 36,000 online stores using MonkeyData, including big e-commerce platforms in the US, Canada and many others in Europe like Shopify. We see the same problem everywhere: more than 80% of the SMEs on these platforms have difficulty accessing working capital.

A core driver for me is to get capital into the SME market. We can see how the economy and companies are changing. So thanks to our experience at MonkeyData, we founded Lemonero as a spin-off. We started development three and a half years ago and went live two years ago in the Czech Republic. Lemonero is how we can help transform the economy.

What do you do differently?

Our experience and the core technology from MonkeyData allowed us to launch Lemonero really fast. The disruption we’re bringing lies in the unique AI powered scoring model and our processes, which are much smarter than any other on the market. Our machine learning algorithms are trained by MonkeyData’s 36,000 online store customers. We work primarily with transaction data and the performance data we download from a merchant’s PSP account. Thanks to this, the loan approval rate is much higher than at a bank or financial institution. The second really important disruptive thing is that the whole onboarding process is fully online.

How has the relationship with KB/Societe Generale helped Lemonero? 

We launched Lemonero two years ago in the Czech Republic and in the first year growth was exponential. We invested our own money and the loan volume was really small, so the breakthrough for us was getting a strong funding partner. We had call-backs with other banks wanting to cooperate. KB and Societe Generale were the strongest when we had a deep dive conversation about their goals and the practical support they could provide. We knew they were serious and, 12 months on, I can prove it.

With KB as our funding partner our loan volumes have been growing by 100% to 145% per month in the Czech Republic since October 2020. We’re on course to provide €6 million of loans this year. With KB and Societe Generale’s support, we intend to scale up and expand in Europe next year with partners in other CEE markets, Germany, France and elsewhere. We want to be lending something like €40 million euros a year.

Not all the benefits are visible at the front end, but we’ve made huge progress at the back end over the past 12 months as a result of the relationship. A major reason for the deal with KB was leveraging its expertise in compliance, licensing and all the processes to support the expansion of Lemonero. We’ve improved the loan approval rate and the scoring model in the risk management part and we have also launched a new and faster onboarding process. Another example where our relationship with KB and Societe Generale is helpful is in opening doors for meetings with potential partners.

What is your long term vision for your sector and for Lemonero?

Increasingly consumers and companies are using financial services in the ecosystems they like or where they are spending the most time. We can see that it’s necessary to provide our service as an embedded solution to these platforms, not like our own brand as a direct line lender, because this is how the market is changing.

I don’t see a future where there are no banks. Fintechs like Lemonero will be really fast, flexible and innovative in front end solutions, customising products to meet the market’s needs, but it's important to have banks as strong back-end institutions. So cooperation between banks and fintechs is the best way forward.

I see Lemonero as a digital bank for SMEs in omni-channel e-commerce, fully integrated into the partner ecosystem so they can get their funding in two clicks. Then we will launch Lemonero insider analytics service. SMEs need to know how much money they require, when they need it and how to use it. We’ll be able to tell them where they’re losing money from what they’re selling, which is one of the top 10 financial mistakes SMEs make. My vision for Lemonero is to be a super strong and invisible partner for SMEs, to be like their finance director.

Jan, how has KB benefited from the partnership with Lemonero?

Our role as a bank is to accompany SMEs in their growth journey and clearly the rapidly-developing e-commerce sector is where we want to be. Our partnership with Lemonero has been highly successful in its first year, giving us a new channel to bring much-needed finance to the SME sector, which is the backbone to the economy. Lemonero has already accumulated more than 1,000 clients in the Czech Republic, including the country’s the country’s biggest e-commerce platforms, PSPs and marketplaces.

From the beginning we recognised that Lemonero’s market intelligence, data analytics and machine learning would be hard to replicate from a standing start and the speed of the loan approval process is truly impressive. It’s been mutually beneficial because, as Jan kindly mentioned, our own expertise will enable Lemonero to scale up and expand, not just in other CEE countries but right across Europe. Next year promises to be very exciting.