New bank to help tech firms flower

The arrival of Silicon Valley Bank in Ireland will benefit tech companies scaling up, rather than start-ups

IN THE CURRENT economic climate, the news that a new bank is to enter the Irish market is bound to make the headlines. Earlier this month Silicon Valley Bank (SVB) announced that it is to lend an estimated $100 million (€80 million) to technology companies in Ireland.

The announcement is part of a collaboration with the National Treasury Management Agency (NTMA) which will see Ireland’s debt management agency invest $50 million into funds managed by Silicon Valley.

For those in the know, the news that SVB was dipping its toe into the Irish banking scene was not a big surprise. Ireland has been on SVB’s radar for some time. Due to the international nature of the tech industry, the bank already deals with a number of Irish technology companies, and has contact with a lot of players in the venture capital industry.

The California-based bank’s roots stretch back 30 years, evolving in parallel to the nascent technology sector. The Nasdaq-quoted company, which is a niche lender to the tech sector, now has 27 US offices and seven international operations in China, India, Israel and the UK.

SVB, which aims to lend $100 million to the Irish tech sector, will target fast-growing businesses in the fields of technology, life science, cleantech, and private equity and venture capital businesses.

Its entry into the market, comes as the Government announced details of its long-promised microenterprise loan initiative, which will offer €90 million in new lending to 5,500 micro-enterprises. The initiative is the latest addition to a suite of finance measures aimed at small businesses offered by the Government, such as Innovation Fund Ireland.

But will the entry into the market of a private bank specifically targeted at the tech sector make a difference to the funding landscape for tech companies?

As it stands, it appears that Silicon Valley Bank will be offering debt finance, or traditional lending to tech businesses. Because it will only operate as a lending back, and will not be taking deposits, the bank is not obliged to obtain a banking licence, though it is worth noting that it has recently opened a fully-serviced bank in the UK, and has not ruled out developing its presence further in Ireland in the future

Brian Caulfied, partner in DFJ Esprit and non-executive director of the Irish Times Ltd, says the arrival of the American bank in Ireland is “hugely positive” for the tech industry here. “They are a very specialist bank; they understand the needs of technology companies much better than more traditional lenders do. Their entry will be hugely beneficial,” he said.