It's go for bespoke tech bank in Ireland
Silicon Valley Bank expects to loan $50m over the coming year to Irish tech firms to fill a gap in the market between seed capital and later stage funding
IT MAY NOT have a branch, or even an office in Ireland, but Silicon Valley Bank (SVB) is nonetheless one of the few financial institutions that is actively lending to Irish businesses. The bank has already done “a number of loans” in Ireland since signing its agreement with the National Pension Reserve Fund (NPRF), and has plans to lend up to $50 million over the coming year.
The US bank, which specialises in lending to technology companies, first announced its arrival in Ireland last June, as part of an agreement with the NPRF.
This will see the NPRF invest in a venture capital fund run by an arm of SVB, and in return, SVB has committed to lending $100 million to Irish companies over the next five years. But according to the bank’s executives, there is potential to exceed this target.
“Our view is that it’s a great market for us, as there are lots of companies at an early/mid-stage. We’re excited by it,” notes chief executive Greg Becker.
Becker was in Dublin last week (September 12th) along with chairman Roger Dunbar and Phil Cox, head of EMEA and India, to meet with venture capital (VC) funds to scope out the potential of working together.
So far, the bank has been “extremely well received” in Ireland, as Cox, whose remit includes its UK branch which it opened in June, puts it, and he expects it will fill a gap between seed capital/early stage funding – which may never have been more plentiful – and later stage funding. This can prove more problematic to high-growth companies.
Cox expects that the bank will do about half of its targeted business in Ireland this year.
“We hope to deploy $50 million in the first year. We see lots of opportunities in front of us,” he says.
Key to this will be the appointment of a person on the ground and recruitment is a work in progress.
“We’re looking for an individual to be more dedicated to Ireland, and we’re trying to figure it out at the moment,” says Becker, adding that the longer-term plan would be to develop a team in Ireland, reporting back into the UK where it has a branch.
The bank focuses on the tech sector, allowing companies to “grow fast” by subsidising VC funds with debt. And, while banks around the world struggle to regain their balance in the wake of the financial crisis, by pinning its tail to the technology sector, SVB continues to drive forward. Last year, it grew its global loan book by 30 per cent, and this year it is aiming for an increase of 20 per cent.
“SVB is really unique. We’re one of the few banks to loan you money when you need it,” says Dunbar with a smile.
The bank lends from start-ups all the way up to companies doing billions of dollars in revenue, although it is “less likely” to lend to start-ups in the pre-revenue phase.
“You won’t see any other banks lending to pre-revenue, negative cash-flow companies. It’s what distinguishes us,” says Dunbar.
While unwilling to disclose exactly how SVB can lend to such risky prospects as nascent tech companies and come away with their shirts still on their backs, Becker does give an insight into the bank’s “secret sauce”.