French startup Lydia is collecting a Series B round worth $ 45 million. Tencent leads the round, with existing investors CNP Assurances, XAnge and New Alpha also participating.
If you live in France, you probably already know Lydia pretty good. The company has become an ubiquitous app for mobile payments, especially for people under 30. Think of it as a kind of square cash or venmo, but for France.
"At first we wanted to increase less, but in the end we increased more," Cyril Chiche, co-founder and CEO of Lydia, told me in a phone interview.
The company has managed to attract 3 million users in France. What is more impressive is that 25% of French people between the ages of 18 and 30 have a Lydia account – and 5,000 people sign up every day. Lydia currently has 90 employees.
More recently, the company has grown beyond peer-to-peer payment. First, the company wants to help you manage your money in many different ways and with an important value – everything should be done in real time.
You can create multiple Lydia accounts to put money aside, or use money in this sub-account for a specific purpose. This function alone makes the app a versatile money management app.
For example, you can link a Lydia payment card to one Lydia account and a virtual card to another Lydia account. This virtual card works with Apple Pay, Google Pay and Samsung Pay, among others. You can change these settings in real time.
You can share accounts with other Lydia users. And shared accounts are really shared – anyone can top up and withdraw money from this account. You can spend money directly from this account or withdraw money from another account.
You can also convert any Lydia account into a money pot account. With just a few clicks, you can create a link and share it with your friends so they can add money using their regular payment card or a Lydia account.
More recently, the company has launched the "market", a marketplace for other financial products. You can borrow up to 1,000 euros in just a few seconds using the Lydia app. You can also insure your phone and other mobile devices. If you open a bank account, insure your home with Luko, switch to a different electricity and gas supplier, compare mobile and internet providers and much more, you can get a free credit.
And this strategy will be crucial in the future. "We have an ambitious goal to turn Lydia into a mobile financial services app," said Chiche.
He also pointed out that Tencent with WeChat is the most successful company when it comes to creating a mobile marketplace for financial products.
"Tencent is also number one in the video game industry, and there is no industry with as much user interaction," said Chiche. Tencent bought Supercell, bought 40% of Epic Games, bought Riot Games (League of Legends), invested in Ubisoft, Activision Blizzard, Discord, etc.
Compared to many fintech Lydia does not want to completely replace new start-ups – the company wants to create a meta-banking app. Thanks to network effects, peer-to-peer payments are the top of the funnel and an excellent strategy for user acquisition.
You can then connect your Lydia account to your bank account and debit card. This way you can send money back and forth between your Lydia account and your bank account. As a user, this strategy slowly pays off over time. After a while, you'll spend money directly from your Lydia account and rely more on Lydia's payment features, with your bank account acting as a money backend.
At the end of the funnel, Lydia hopes to turn active Lydia users into paid customers with a handful of in-house financial products and third-party financial products. In other words, Lydia doesn't want to become a bank like a traditional bank, but a financial center. The expansion of the market will be a major focus for the company in the future.
While Lydia is available in other European countries, Lydia continues to be heavily used in its home market, while other markets lag behind. In today's financing round, growth abroad will be the second key issue.