“The Connections You Make in an Accelerator Program Are the Most Valuable Take-Away”
2018 has so far been a successful year for F10 alumni SONECT: they announced a new partnership with a well-known bank, won an innovation award and are constantly expanding their network. Founder Sandipan Chakraborty shares memories, further expansion plans and advice for other entrepreneurs with us.
The concept of a Swiss startup to enable cash withdrawals wherever and whenever people need it most has proven successful: In January this year, the F10 alumni SONECT announced a partnership with the Aargau-based bank Hypothekarbank Lenzburg. This means that all customers of Hypothekarbank Lenzburg will become SONECT users. “The first customer is always a big step for a startup and we consider this partnership a validation of what we do”, says Sandipan Chakraborty, founder and CEO. “The IT solution has already been integrated and we are now preparing the roll-out for the end customers.” PostFinance, a large retail bank in Switzerland, is already their investor and multiple retail chains are joining the network.
According to their CEO, the Swiss startup has further expansion plans: “We want to grow our network in Switzerland. As the Swiss market is limited, we are preparing for the launch in other European countries”. SONECT is currently doing fundraising. “This money will be used to expand to three or four markets in Europe, in which pilot projects were carried out and a 90 percent satisfaction rate was achieved”, states Sandipan. More pilots are planned and SONECT employees are already based in the regions they would like to enter the market.
“Convenience is the number one reason to use SONECT”
SONECT is a B2B2C business. Business customers are retails banks and the end users are their business as well as private customers. There are two main groups of private customers who use SONECT today. The first is young people like students or apprentices who want to control the amount of money they spend. When they withdraw money and only pay cash, it is easier to keep expenses within their financial limits. The second group is parents with kids. “Convenience is the number one reason to use SONECT”, explains Sandipan who had come up with the idea of virtual ATMs when he was in desperate need of cash to pay for the babysitter. On a snowy Friday night, he was hurrying to the next ATM – which was about 600 meters from his home – and watched his neighborhood pizzeria selling pizzas and filling up their cash register to the brink. “Parents are often busy and forget to keep cash in their wallet but depend on it as they have to pay for babysitters, pocket money and stuff at their kids’ schools – all of which is paid in cash in Switzerland”, Sandipan observed.
With SONECT, end users can withdraw cash with or without their next purchase, while dining out at a restaurant or when having a pizza delivered. The owners of shops, restaurants and deliveries benefit by gaining new clients, offering a better customer experience and reducing their cash overheads. Since operational costs of ATMs are also reduced, banks could benefit from SONECT’s decentralized cash distribution model as well. Sandipan and his team won the global Innovation Jam by Temenos in Dublin in May 2018 for their business idea.
Getting relevant insights into the local markets thanks to accelerator programs
“It is crucial to understand the market and as consumer and customer needs differ significantly in every market”, states Sandipan. The SONECT team is constantly trying to get a better understanding of customer needs. “Accelerator programs are a great way to do market research and get relevant insights into the local market”. SONECT had participated in the first batch of F10 FinTech Incubator & Accelerator’s P2 “Prototype to Product” program. When the startup entered the program, there were two people working for SONECT – now the team has grown to 14 people.
“The F10 program furthermore helped us to understand the dynamics of payment systems thanks to the closeness to SIX. We were able to validate our business model, the pricing and customer engagement with insiders.” The SONECT founder highly recommends the F10 “Prototype to Product” program for entrepreneurs developing services and products in the payment area.
A way to lasting success: creating new markets
One Masterclass learning is still on Sandipan’s mind: “I really liked the class about the red versus blue ocean strategy and still apply it.” In a red ocean, industry boundaries are defined clearly and accepted. Consequently, the competitive rules of the game are known by all relevant players and companies try to outperform or outpace their rivals to obtain a greater share of the existing demand. As the market gets saturated, prospects for profits and growth are reduced not just for one but for all players. A better way to lasting success is to create new markets where no competition exists – blue oceans that are defined by demand creation, new market spaces and opportunities for sustainable growth. Find out more about the blue ocean strategy.
“Nevertheless, often the networking and connections you make in an accelerator program are the most valuable take-away. We had some very interesting discussions with partners and were able to build up personal relationships with inspiring corporates, mentors and industry experts”, says Sandipan.
The biggest challenge the SONECT founder has faced after graduating from F10 is expectation management. “Reality is always different than the vision and everything always takes longer than planned. Balancing communication and expectations of investors and clients is very difficult, especially when you are forced to deviate from your goals.” His advice for other new entrepreneurs in similar situations: “Be persistent, hang in there and find new ways! When one door shuts, then find other one that is open.”