The company, founded over a game of poker between two founders about 40 years ago, developed into the most critical financial organization for the developing tech industry, serving half of all US venture-backed companies and 44% of those that went public last year. Also, it has a wide range of products and services, including regular checking accounts, VC investments, loans, and currency risk management.
The bank claims there are various ways to characterize us on its website. One is just ‘Bank.’
Here are the different ways the Bank of Silicon Valley extended its tentacles throughout the IT industry as the globe begins to examine the effects of the biggest bank collapse since the 2008 financial crisis.
Traditional banking was the superior service provided by SVB. It offered standard checking accounts, credit cards, and money market accounts with yearly yields of up to 4.5%.
The fact that the bank was an investor in its own right is essential as the failure of SVB spreads across businesses. For more than 20 years, the company’s venture capital and credit investment arm have made direct investments in some fund managers and portfolio firms. Its funding has benefited Sequoia Capital, Accel, Kleiner Perkins, Ribbit Capital, Spark Capital, and Greylock.
As of the end of the previous year, 56% of the bank’s global fund loan banking book consisted of loans to venture capital and private equity firms. It’s still being determined how that will impact VC firms specifically.
Venture debt, a loan provided by banks and nonbank lenders especially created for early-stage, high-growth businesses with VC funding, was invented by SVB. Its other lending options included mortgage financing, partner lines of credit for businesses, and private stock-based lending. Several NGOs could use its lending services, including charter schools, private colleges, and mission-based groups.
A Wealth Manager
In addition to lending to companies, SVB provided private banking and wealth management services to CEOs.
A Financial Advisor
The bank’s securities section offers services like M&A advising, equity and debt capital markets, proprietary research, sales and trading to firms emphasizing healthcare and technology. The company lists more than 1,000 transactions on its website, including those in which it served as a joint book runner, exclusive financial adviser, or exclusive placement agent. It has traditionally taken pride in offering entrepreneurs everything they need, from launch through significant acquisitions and IPOs to venture rounds and seed funding. The bank claims on its website that “you won’t outgrow SVB.”
As soon as a startup joins the SVB “ecosystem,” it has access to various gatherings that bring together investors, other entrepreneurs, and individuals involved in the startup industry. For many years, it was challenging to find a significant startup event that SVB didn’t sponsor. This was just one of the bank’s numerous initiatives that helped it become so ingrained in the startup community that some founders felt obligated to work with it.
CEO of early-stage startup Refiberd, Sarika Bajaj, claimed that she selected SVB to bolster her company’s credibility. Everyone said, “Well, you want to do SVB because if you don’t, they are going to draw you out,” she said.
A Winery Backer
Acting as the leading financial services supplier to premium wine producers, mainly in the Napa Valley, Sonoma County, Central Coast regions, and Pacific Northwest, was one extremely California-centric function that SVB fulfilled.
A Risk Hedger for Foreign Exchange
Managing currency risk for multinational corporations was one of the bank’s lesser-known services. With teams exclusively serving private equity funds, seed and venture capital, late- and early-stage tech, and healthcare enterprises, SVB stated that it could insure against volatility across more than 90 currencies.