With the advent of technology, easing and simplifying B2B trade is a prerequisite. Delve in to know how Hokodo is catering to this market disruption.
Louis Carbonnier is the Co-Founder and Co-CEO of Hokodo where he leads the commercial and product functions. Hokodo is a fintech company that enables B2B merchants and marketplaces to offer a buy now, pay later solution to their customers.
1. Can you tell us about yourself? How did you get into entrepreneurship?
I started off my career in consulting, working in the financial services practice at Oliver Wyman. During my 8 years tenure, I had the opportunity to work with 40+ banks and insurers that I really looked up to including BNP, Allianz, HSBC and more.
I quickly learned that many of these companies were trapped in the past because of bureaucracy and inadequate tech that they couldn’t migrate away from. It gave me encouragement to find out the bar was so and that the area was ripe with opportunity.
Consulting is excellent for building good generalist skills due to the nature of frequently moving on to new assignments, but this comes with a key drawback: one never gets the chance to sit behind the steering wheel. It’s like designing the journey and helping build the car but never driving it. I knew that one day I wanted to have a shot at running a business of my own.
During all that time, I saw that there was a large financing gap that financial services incumbents were not tackling. When I joined Euler Hermes (Allianz Trade), it became obvious that there was an opportunity around bringing trade credit online and making it accessible to SMEs. At this stage, my mindset moved from ‘I want to build a business’ to ‘I’ve spotted a real opportunity to build a business.’
We founded Hokodo in 2018 with the goal to make trade credit simple, fair, and accessible to sellers and buyers alike. I founded Hokodo alongside my fellow co-founders Richard and Sami after my early career in embedded finance and credit insurance had shown me the gap that Hokodo could fill.
2. What was the inspiration behind starting Hokodo and how has the company evolved over the last couple of years?
My role at Euler Hermes allowed me to see the major shortcomings in trade credit, in particular when it comes to accessibility. I realised that credit terms are readily available to corporations while SMEs who truly need them the most can’t access it. I also found that trade credit was designed for the offline world, rather than the digital world we live in. These realisations got me thinking about creating a new product, and, shortly after, another one of our founders, Sami, joined me to prototype some BNPL APIs for B2B. Richard then came on board and with the three of us working together, the Hokodo team was born.
3. What’s your favourite part about working in this industry?
One of my favourite parts of working in this industry is being able to have a positive impact on the growth of small and medium-sized businesses.
Hokodo allows merchants to offer trade credit instantly online. This helps small business buyers access the payment terms they not only want but that they need for their business to thrive.
The other thing that really drives me is having the opportunity to hire people that I like and respect to form a tight team capable of taking on big challenges.
4. What makes Hokodo unique? How does it stand out from its competitors?
I would say what really makes Hokodo different is that we meet all the requirements of B2B merchants. This means that our customers have one provider managing the end-to-end process from checkout to financing, payment, and collections. Our customers don’t have to worry about admin and can just focus on fostering growth while we handle the rest. Another point of differentiation is our geographical reach–we serve the largest European markets including the UK, France, Spain, Belgium, the Netherlands, and Germany.
5. How do you think BNPL is disrupting the fintech industry?
BNPL has been widely adopted in the B2C space with big names like Afterpay, Affirm, and Klarna dominating the market. Now, though, more entrepreneurs and investors are seeing the value of BNPL in the B2B space. Yes, BNPL in the B2B space can be seen as disruptive, but at the end of the day, it’s providing an essential payment service for businesses that have been around for decades. Trade credit is not new itself, but the frictionless way that we’re able to deliver it online is.
6. Could you brief us on the process of Credit management on the Hokodo platform?
At Hokodo we’ve built an in-house data platform that feeds our underwriting engine. We assess the risk of a transaction based on several traditional and alternative data sources, and then this risk is translated into a credit score. From this, we are able to recommend a tailored credit limit and payment terms for each buyer, even on their first purchase. This makes us more sustainable as we make better decisions, and it saves our merchant partners a lot of time as we take on the burden of credit analysis, fraud detection, limit management, reconciliations, and collections.
7. What are the biggest challenges you’ve faced when trying to grow your business?
One of the biggest challenges that many businesses and startups face is completing funding rounds. It can be overwhelming and stressful at times, but we were lucky to have completed our Series B raise when we did. Now, with a recession looming, investors may start to tighten their purse strings, making it difficult to raise money for your business. I think this could last for the foreseeable future. My advice to startups looking to raise capital in this economic climate would be to invest in products and manage the runway until external conditions improve.
8. What are Hokodo’s plans for expansion and growth? Where do you see it in the upcoming years?
Our goal is to enable 1 million businesses to access our platform by 2025. We have a laser focus to achieve this mission and our vision is for every company to have access to the financial tools they need to build their business. To achieve this goal, we’re rolling out our solution in Continental Europe and expanding our product to cover more channels besides eCommerce.
9. What motivates you to get up every morning? What do you take pride in when it comes to your company?
I think what motivates me to get up in the morning is the incredible team we have built at Hokodo. The team has to take a lot of credit for our strength at Hokodo. This is what I’m most proud of. Our team is now more than 80 people strong, who show dedication and commitment all in their individual ways.
10. Where do your passions lie? What do you think defines you as a person?
My passions lie in learning. Having a passion for learning, I think, is essential to being a founder as you have to learn, grow and expand your knowledge with each step in your business’s journey. This, then, goes hand in hand with curiosity, as to be successful you must never truly be satisfied and continue to look for new ways of doing things.
11. What is the most significant piece of advice you would want to give to company leaders?
I’d say my most significant piece of advice would be to start your business with the right co-founders. It’s really important to combine the right blend of personalities, knowledge, and interests. I think you need to align three stars: a good idea, enough funding, and the right co-founders.