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Photo: iBanFirst CEO and founder
Pierre-Antoine Dusoulier. Courtesy of
iBanFirst.
There’s been such a frenzy of massive
French Tech fundraisings lately that it’s
easy to just glimpse at the headlines and
pump your first. But fundraising is
evolving rapidly amid a tidal wave of
global liquidity, and so these deals are
more complex than the classic venture
capital investment.
iBanFirst
is a great example of this. The fintech,
which helps facilitate international
payments,
announced this week that it had signed
a
€
200 million
deal with
Marlin Equity Partners
. Naturally, this provoked the high-fiving
that comes with any big funding news.
I’m on picking on Goy. But iBanFirst didn’t
really “raise” that money in the classic
sense. On the day the new partnership was
revealed, I spoke with iBanFirst CEO and
founder
Pierre-Antoine Dusoulier
who walked me through the details and the
rationales of the deal.
For context, Dusoulier founded IbanFirst
(originally called “FX4Biz”) in 2013 to
help small and medium businesses manage
payments across borders. In 2016, he
raised
a round led by French telecom entrepreneur
Xavier Niel and would go on to raise a
total of €46 million over three successive
VC rounds. The investors included a host of
business angels, family funds, as well as
more established names like Serena, Breega,
Elaia, and Bpifrance.
At the moment, business is booming. Think
of iBanFirst as a kind of Transferwise for
businesses that need to navigate payments
across many countries and currencies.
iBanFirst simplifies that process and makes
it more transparent and predictable. Thanks
to the VC funding model, the company has
been able to innovate and develop its
product and find its market fit.
“We are growing exponentially,” Dusoulier
said. “Now, we have a product which is
really better than the product you have
with smaller players. So the opportunity
really is to be the leader in Europe, not
only by continuing to fuel innovation to
grow, but we also know there is an
opportunity to buy smaller players.”
The next obvious step is to raise an even
bigger VC round. But this poses a number of
problems for a company like iBanFirst. The
first is that large scale-up rounds from
VCs are still tough to come by in Europe.
(Those
eye-catching funding announcements
are increasingly driven by PE funds and
growth equity funds).
Next, after three rounds of funding,
iBanFirst’s cap table is a mess. There are
multiple complex layers of preferred shares
that would have to be addressed by any
large, subsequent funding that could
complicate discussions around valuation and
distribution funds.
“When you start to raise a lot of money, I
think it can be an issue for the future of
the company in terms of alignment,” he
said.
Finally, iBanFirst wants to go on an
acquisition spree to consolidate the
European market. But if it uses VC money,
that means continuing to dilute everyone’s
shares. And VCs, with an eye toward an
eventual exit of some kind, don’t like
startups taking on excessive debt.
Enter Marlin
Trying to untangle these various knots led
iBanFirst into discussions with Marlin,
which offered more financing tools than a
classic VC. What happened on a technical
level is that, in partnership with Marlin,
Dusoulier created a new company that
acquired iBanFirst.
As part of this acquisition, the new
company bought out most of the former
shareholders. Elaia, Bpifrance, and Xavier
Niel increased their holdings in this new
company. The rest – business angels,
Serena, Breega – were bought out. That deal
resets and simplifies the cap table going
forward should iBanFirst ever decide to
raise more money. As Xavier Lazarus of
Elaia hinted on Twitter:
Marlin is now the largest shareholder in
this new
iBanFirst with 51% of the shares,
followed by Dusoulier with about 25%
. He wouldn’t break down how much of the
money went to buying out previous investors
and how much went into iBanFirst’s
treasury.
Creating a new corporation also made it
easier for Marlin to come into the deal, an
essential step for iBanFirst which wanted a
U.S. investor to give it more international
credibility and who could write a big
check.
Finally, Marlin is also providing access to
about €50 million in debt. iBanFirst will
be able to use that debt to acquire
companies without having to give up
ownership stakes to more investors. Because
the company is cash-flow positive, it
should have no problems managing reasonable
debt payments.
To be clear, none of this takes away from
iBanFirst’s accomplishments. This is
clearly a smart, sophisticated approach
that recognizes the challenges and
opportunities in the shifting financial
markets. Entrepreneurs have to adapt their
mindsets and consider a wider range of
options as they seek to finance their
scale-ups.
As for tracking the progress and success of
French Tech, that’s going to continue to
get muddier as the line between exits and
fundraisings gets blurrier. We’ll have to
get a bit more sophisticated in the way to
discuss such moves.
Audio Goodness!
Join me and co-host
Ethan Pierse
each Thursday night at 7 p.m. CET for our
French Tech News Clubhouse
session where we’ll look back at the week
in French Tech.
️ Also: Please subscribe to the
French Tech News podcast
, a weekly discussion with France’s
entrepreneurs, innovators, and venture
capitalists.
In Other News…
Speaking of blockbuster funding
announcements, I’m still reeling from the
news that
Contentsquare
raised $500 million. Even after a string of
9-figure fundings, Contentsquare still
managed to blow the doors off everyone to
set a new French funding record.
The takeaway: President Macron set a goal
of 25 unicorns by 2025. I think there’s a
decent chance that France will hit that
number this year. As others have noted,
it’s time to talk about deca-corns. France
is not alone in experiencing this
blistering pace. The funding bar is being
raised across Europe and around the world.
It’s great that France is getting its
share. Now it needs to raise its ambitions
even further.
Funding News
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