Why Silicon Valley Bank was so important to UK tech sector
Silicon Valley Bank’s name isn’t just hollow branding. Founded in Santa Clara in the 1980s, in the heart of the Bay Area’s tech cluster, it was a regional bank that served the local economy.
As that local economy became the engine of American growth, SVB – which collapsed on Friday – grew alongside it. It remained a tech specialist, a limitation that allowed it to continue to be regulated as a regional bank and so avoid the stricter requirements piled on larger competitors, but otherwise spread across the US and the world.
In 2022, the UK branch was required to become a subsidiary bank in its own right, after it hit a threshold of £100m of insured deposits. In absolute numbers that’s comparatively small: in the UK, the first £85,000 deposited is covered by insurance, so SVB could have hit it with only a couple of thousand clients.
But in the UK, as in the US, those small businesses were unique. The bank specialised in high-growth startups, solving problems that other banks wouldn’t touch. A company with barely any revenue and only a few months of accounts to its name would struggle to open a corporate account, let alone access complex financial services. One venture capitalist described trying to open a bank account for a portfolio company at Barclays and being told they were limited to a debit card, a chequebook, and a single director – even while the company itself had 10 employees and a huge cash investment waiting to be spent.
Early-stage startups have other unique characteristics, all of which SVB turned itself to serving. They take large sums of money and then sit on them for months or years, slowly spending them down as they grow larger and larger. Unlike typical small businesses, they don’t tend to be interested in
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