Given how deeply and widely its roots run across the industry, Silicon Valley Bank — dramatically seized by the federal government amid a crippling bank run and a swooning stock — couldn't have a more apt name.
While its best knowns as a bank for startups, 56% of its loans were actually to VC and private equity firms, secured by their limited partner commitments.24% were to various tech and health care companies, including 9% of all loans going to early and growth-stage startups .Between the lines
: One of the key reasons SVB is so deeply seeded within startup-land is because of venture debt, its specialty. That's dependent not only venture financing, but on trusting the assessment of VCs backing a certain company. “[V]enture debt emphasizes the borrower’s ability to raise additional equity to fund the company’s growth and repay the debt,” SVB explains in aSo in addition to counting on VCs to back startups that have a shot , SVB also depends on venture funding's circle of life to get its money back from its startup clients.: While SVB was among the country's top 20 banks, a number of smaller challengers have sought to provide alternatives to startup clients.
Brex, Ramp, Arc, and others have cropped up to provide venture-backed startups with corporate credit cards and a growing number of financial services. Meanwhile, more traditional banks have rolled out startup friendly brands and services to appeal to that cohort of customers.
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