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

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

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

At SVB, however, I’ve always had the kind of banking experience that you only see in movies: bankers who take me out to lunch and talk through how I should structure debt instruments, who are happy to connect me with business partners and most importantly of all: who actually seem to understand what it is I do for work.

With the week’s bank run hysteria temporarily quelled, it might be important to step back and take stock of why it is that SVB is special and why I desperately hope some white knight buys it and keeps the organization intact.

Tech Banking

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

As much as I love talking about work (don’t get my wife started on it), I only really enjoy explaining the basics to somebody 1-2 times. It is especially frustrating when I meet with someone who I need to learn from (say, learning how to think about venture debt covenants in a rising interest rate environment and changing VC sentiments), and the whole conversation is a forced lecture on Robotics 101. Which happens a lot more than you’d think.

But it doesn’t happen when I talk to Matt Trotter and the rest of the Frontier & Deeptech Banking team at SVB. Can Trotter hop in and help tune a longitudinal speed controller? Probably not (but then again, neither can you). He can, however, tell me how the outlook for Robots-as-a-Service businesses is changing and how financing their CAPEXs might be affected if the Fed continues to raise interest rates.

Which, you know, is pretty strategically relevant for my own company and our customer base.

Needless to say, SVB has hit it out of the park for regular old “revolutionize XYZ industry”-as-a-Service companies as well. While I’m confident other banks have learned how to not blink at the large wire transfers that come into a startup when they fundraise, some of the specific weirdness of recurring automatic payments, and the like; they likely only got good at it by realizing how much money SVB was making doing it well. It was only 10-20 years ago that it was hard to open a bank account as a new company, even with fundraising dollars in hand.

Venture Debt

And then, of course, there’s venture debt which was a valued lifeline to almost every large startup I know. The whole idea of lending a startup money based on the assessment that they would probably raise more to cover the principal likely makes midwestern bank officers pucker, but SVB got really good at doing it.

So good, in fact, that when I was first exploring venture debt for Starsky, the advice I got was “get a couple competing offers and then use them to get better terms when you decide to go with SVB.” So I got a big line of venture debt from SVB and, well…lost it all when we failed.

After Starsky, I did a somewhat extensive apology tour to the people whose money I lost. As time went on, however, I honestly became awkward about approaching those investors/partners I hadn’t yet apologized to. SVB was on the list of people I didn’t apologize to early. After losing them millions of dollars, I was frankly relieved they didn’t want to break my legs, and figured losing a valued relationship with Trotter was par for the course.

So when I started Polymath Robotics, I did with Mercury as my bank. They have a great app and it’s blindingly easy to set up and account so they became a really easy place to start. A year later, I bumped into Trotter and rather than him being mad about losing his money, he was bummed I wasn’t working with him again.

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 want to work with you again.”

So, of course, I switched back to SVB.

Founder Support

It wasn’t purely coincidental that I bumped into Trotter that day in 2022. Earlier that year I had a windfall from an angel investment and wanted to buy a house. The problem was that I’m not particularly bankable.

The mortgage industry, I was shocked to learn, has changed radically from the world where Jimmy Stewart banked a small town in ‘It’s a Wonderful Life.’ Pushed by high competition and low rates, most mortgage brokers didn’t have the spare mental bandwidth to understand my circumstances. They couldn’t why I suddenly had the money from a downpayment and whether they could count on my income, given that I was 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 in May’22) and a 40% down payment.

These mortgage brokers were all based in San Francisco, where I am far from a unique snowflake. You would assume they would have seen it before.

SVB, however, knows me. They understand the windfall stuff, the startup stuff, and frankly, have a better understanding of my earning potential than I do.

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

Community Support

From when I first worked at a startup in Singapore in 2011, through when I was at a boot camp in Boston in 2012, and then extending through my entire career in Silicon Valley; there has only been one group putting on tech meetups and events everywhere I’ve been: SVB.

Whether it’s events where co-founders meet, ones where VCs and Founders speed date over wine, or respites from chaotic conferences, SVB seems to have exclusively invested their marketing dollars in the sort of high touch events that add value without feeling like a commercial.

And they were no different when Polymath started hosting invite-only meetups for founders of companies making large, autonomous robots. They showed up early, brought a couple of bottles of wine, and extended invites to their customers and friends. And setting that up wasn’t some whole big corporate thing, it was just a matter of sending a quick email to Trotter.

What’s Next

I was lucky enough to notice the signs of a panic on Wednesday and get most of Polymath’s money out of SVB. In the 2023 SVB Bank Run, I was a noted winner.

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

I’m incredibly hopeful that some G-SIB will buy SVB and keep it the same or, better yet, have some consortium lend it the money to shore up its deposits and let it continue on independently.

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