Why I Bank(ed?) with SVB and Will Again

Silicon Valley Bank is by far the best financial institution I have ever worked with.

In fairness, that might not be a high bar: I don’t come from the “private banker” money, I’m too young for bank teller who knew your name, and second prize goes to any bank whose app doesn’t. Don’t actively make it difficult to use.

However, at SVB I’ve always had the kind of banking experience you only see in movies: bankers taking me out to lunch and explaining how I should structure debt, happily connecting me with business partners and most importantly: who really seem to understand what I do for a living.

With the week’s bank run hysteria temporarily quashed, it might be important to step back and take stock of why the SVB is special and why I desperately hope a white knight will buy it and keep the organization intact.

tech banking

I founded two autonomous mobile robotics companies (Polymath Robotics and Starsky Robotics), one of which was self-driving trucks on public roads and faced significant regulatory hurdles. When it comes to dealing with non-robotics vendors, I’m at the forefront.

As much as I love talking about work (don’t let my wife start that), I really just enjoy explaining the basics to someone 1-2 times. It’s especially frustrating when I’m meeting up with someone I need to learn from (eg, learning how to think about venture debt covenants in an environment of rising interest rates and changing VC sentiment), and the whole conversation is a forced lecture on Robotics 101. Which is a lot more common than you might think.

But it doesn’t happen when I speak to Matt Trotter and the rest of the Frontier & Deeptech Banking team at SVB. Can Trotter step in and help tune a longitudinal speed controller? Probably not (but neither can you). However, he can tell me how the outlook for robots-as-a-service companies is changing and how funding their CAPEXs could be affected if the Fed continues to hike interest rates.

Which, you know, is pretty strategic for my own business and our client base.

Needless to say, SVB has made it out of the park for regular old Revolutionize XYZ Industry-as-a-Service companies too. While I’m confident that other banks have learned not to blink at the large transfers that go into a startup as they fundraise, some of the specific weirdness of recurring automatic payments and the like; They probably only got good at it when they realized how much money SVB was making from it. Just 10-20 years ago it was difficult to open a bank account as a new business, even with donation funds in hand.

Risk Debt

And then, of course, there’s venture debt, which has been a valuable lifeline for almost every major startup I know. The whole idea of ​​lending money to a startup based on the belief that they’d probably raise more to cover the principal probably makes Midwestern bankers forgive, but SVB got really good at it.

So good, in fact, that when I first researched venture debt for Starsky, the advice I received was, “Get a few competing offers and then use them to get better terms if you choose SVB.” So I got a big risk credit line from the SVB and, well, I lost it all when we failed.

After Starsky, I did a somewhat lengthy apology tour to the people whose money I lost. However, over time I honestly became embarrassed to reach out to the investors/partners I hadn’t yet apologized to. The SVB was on the list of people I didn’t apologize to early. After losing millions of dollars to them, I was honestly relieved they didn’t want to break my legs and thought losing a cherished relationship with Trotter was a given.

When I started Polymath Robotics, I did so with Mercury as my bank. They have a great app and it’s incredibly easy to set up and register an account so they became a really easy place to start. A year later I met Trotter and instead of being upset about losing his money, he was disappointed that I wasn’t working with him anymore.

There was no ill will. “This is our business,” Trotter said, “we lend money to startups and some of them fail, but we still make money. We like you and would like to work with you again.”

So of course I switched back to SVB.

Founder Support

It was no coincidence that I met Trotter on that day in 2022. Earlier this year I had a windfall from an angel investment and wanted to buy a house. The problem was that I’m not particularly bankable.

I was shocked to learn that the mortgage industry has changed radically from the world where Jimmy Stewart ran a small town bank in It’s a Wonderful Life. Because of the intense competition and low interest rates, most mortgage brokers didn’t have the mental breadth to understand my circumstances. They couldn’t understand why I suddenly had the money from a deposit and if they could count on my income as I was the CEO of a company that was less than 2 years old and not profitable.

The best they could offer me was double the prime rate (~8% interest on May 22) and a 40% deposit.

These mortgage brokers were all based in San Francisco, where I’m anything but a unique snowflake. They would assume they’ve seen it before.

SVB, on the other hand, knows me. They understand the windfall stuff, the startup stuff and honestly have a better understanding of my earning potential than I do.

So they wrote me a regular mortgage and I was able to fulfill part of the American Dream.

community support

From my first job at a startup in Singapore in 2011, to my bootcamp in Boston in 2012, to my entire career in Silicon Valley; There was only one group that hosted tech meetups and events everywhere I went: SVB.

Whether it’s events for co-founders to meet, VCs and founders for a quick night out over a glass of wine, or to unwind from chaotic conferences, SVB seems to put their marketing dollars solely into the high-touch events type to have invested that offer added value without feeling like a commercial.

And they were no different when Polymath started hosting invite-only meetings for founders of companies that make large, autonomous robots. They showed up early, brought a few bottles of wine, and invited their clients and friends over. And the setup wasn’t a big company thing, it was just a quick email to Trotter.

What’s next

I was fortunate to notice the signs of panic on Wednesday and get most of the money from Polymath from the SVB. I was a known winner at the SVB Bank Run 2023.

But boy, I hope that doesn’t mean I have to find a new banker.

I’m incredibly hopeful that some G-SIB will buy SVB and leave it as is, or better yet, a consortium will lend it the money to shore up its deposits and let it operate independently.

SVB is the foundation of the startup ecosystem and needs to be saved.

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