What's new in Finance ? "Growth Debt" to fuel exponential growth
My discussion with Fatou Diagne (Founder and Managing Partner Bootstrap Europe)
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Hi all 👋
Welcome to this edition of Finscale’s Newsletter!
I’ve just come out of an incredibly intense week, tackling the ever-daunting challenge of engaging my HEC students on the subject of finance. It’s no small feat, especially when you take a quick show of hands and only two students express an interest in pursuing finance. Quite the icebreaker, isn’t it?
But what I believe made these sessions a success (if I may humbly say so) were the anecdotes I shared, drawn from my varied experiences. Stories about creating a bank, witnessing the end of banking secrecy, navigating the Madoff scandal, the 2008 financial crisis, institutional clients adopting crypto solutions, others launching funds and my "job shadowing" sessions with Compliance Officers. All these real-world scenarios bring to life the challenge of doing our best with what we have.
Returning to Luxembourg by train, I couldn’t help but feel a tinge of nostalgia. Life in finance, as it was before 2010, was, in many ways, simpler. Yet, the emergence of so many new players in the financial space and the rise of DeFi, leaves me energised about what lies ahead.
This sense of excitement was mirrored in my conversation this week with Fatou Diagne, my guest. For the past five years, I’ve heard about Fatou and her incredible journey. Seeing the progress Bootstrap Europe has made is truly inspiring. Her intelligence, technical expertise and the remarkable team she leads are nothing short of extraordinary.
Certainly worth a listen!
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Growth Debt
Unlike venture loans, which are typically extended to early-stage start-ups with limited revenue (c.f my discussion with Marc Wormser), Growth Debt is aimed at more mature companies with established revenue streams seeking capital to accelerate expansion without diluting ownership.
Agreements are structured through various instruments tailored to the specific needs of scaling companies. These include term loans with fixed repayment schedules, revolving credit facilities and convertibles. Many agreements feature warrants, Revenue Based financing and Mezzanine Debt. These structures, often secured by assets or intellectual property, balance flexibility and risk. I’ve previously explored some of these topics with guests like Raphael Maarek (Viola Credit), particularly on Asset Backed lending.
Growth Debt has been a key financial strategy for major scale-ups. For instance, Uber raised USD 1.15 billion in High Yield debt in 2016 to support its global expansion. Similarly, SpaceX leveraged USD 250 million in debt in 2018 to advance its ambitious Starlink project. Revolut combined equity and debt in its USD 500 million Series D round in 2020 to drive international growth.
In Europe
Growth Debt is becoming an increasingly important financing tool in Europe for scale-ups. Particularly prominent in sectors like DeepTech, FinTech and BioTech. Specialised lenders such as Kreos (acquired by Blackrock), Atalaya, Triple Point and Bootstrap Europe have established themselves as key players, providing flexible debt options tailored to the unique needs of high growth companies. Moreover, international lenders are entering the European market, drawn by the region’s growing Tech” ecosystem. EIF backed initiatives further support this trend by offering guarantees and co-financing mechanisms, making growth debt more accessible.
Although Europe still trails the US in the scale and diversity of its Growth Debt market, its continued maturation and increasing demand for non-dilutive financing signal a promising future for this funding strategy across Europe.
👉 An article to read about Growth Debt in France (Sifted)
Bootstrap Europe
Founded in 2015 by Fatou Diagne and Stéphanie Heller, Bootstrap Europe is a Growth Debt Fund Manager. With backgrounds in PE/VC and entrepreneurship, Fatou and Stéphanie bring a wealth of experience to support businesses on their journey.
Bootstrap Europe specialised from start in Growth Debt. The firm’s portfolio spans diverse sectors, including BioTech, sustainable energy, DeepTech and ethical finance solutions. Each company in the portfolio is selected for its potential to make a positive impact, both today and for the future.
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