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A Virgin Bond Deal, Community Investment and Frustration With Banks

By October 15, 2020 No Comments

Takeaways from the Tech20 High-Growth Treasurers’ Peer Group 2020 H2 meeting, sponsored by Bank of the West / BNP Paribas. 

By Joseph Neu

Wanted: A better bank user experience. The user interface (UI) and user experience (UX) is a key success driver for high-growth technology companies. So when their banks fail to deliver a quality UI/UX, growth tech treasurers get frustrated. Work from home, of course, has made what used to be digital nice-to-haves into must-haves.

  • Electronic bank account management (eBAM) promises are seen by members as mostly a lie—banks seem to roll out products in line with their own agenda rather than that of their clients. So a bank that asks, “What can I do for you?” and listens and delivers on what they learn can go far with treasurers in growth tech.

Community impact appeals to a growth-tech mindset. In a session on ESG, sustainability and impact investment solutions, members said that having a positive community impact is part of their growth-company DNA and what makes employees feel good about working for an employer.

  • That means treasury needs to make room for impact investment best practices in policy early on. And that includes guiding cash toward minority and community development financial institutions (CDFIs) active in geographies where these companies have a significant presence.

A pandemic is a good time for a virgin bond. It turns out, based on a member case study, that the Covid-19 crisis is an ideal time for a virgin bond deal. Zoom sessions make it efficient to get a credit rating and work with banks as well as outside counsel.

  • It still proved time-consuming and challenging for one small treasury team, but with the help of a project manager, they were able to bring it all together and capitalize on great debt capital market conditions.
  • Add a huge appetite for tech company debt and getting lucky with the issue window, and the bond transaction ended up being a very satisfying experience. You never forget your first debt deal.
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Justin Jones

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