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The unique success enjoyed by Silicon Valley Bank was the result of a long process that began at the vision of the bank by the original three founders, Medearis, Biggerstaff, and Smith. The key to success involved convincing the regulators to establish a bank for the tech sector. Educating the regulators required ongoing efforts in the first decade and thereafter. SVB lenders, including Harry Kellogg, convinced the regulators about the efficacy of tech lending.1
Roger Smith and his bankers from Wells Fargo’s Special Industries Group brought their experience in tech lending to Silicon Valley Bank (SVB). According to Smith, Bank of America (BOA) was the first bank to take warrants for the right to purchase shares as part of the loan cost that they charged tech companies who were backed by Venture Capitalists (VCs) in Silicon Valley’s early days. After both Bank of America and Wells Fargo exited tech lending, SVB became the sought-after bank for lending to tech companies. SVB perfected its tech lending practice to startups that were VC-funded entities. This practice would later be called venture lending, venture loans, or venture debts in the United States and overseas.1
This book provides a first-hand account of the founding, ascent, and dissolution of Silicon Valley Bank (SVB), a tech community bank founded in 1982 with US$5 million that became the nation's 13th largest bank and tech industry's lender and bank. In this pathbreaking work, which challenges conventional understanding of risky tech lending by showing how an independent community bank became the go-to bank for the tech industry in the United States, Xuan-Thao Nguyen includes interviews with key players, ranging from the original founders and early employees to the current CEO of SVB. Chapters explore how the relationship between the venture capital (VC) industry and SVB transformed the way commercial banks comply with banking regulators while lending and nurturing young tech clients. The book demonstrates why the relationships between investors, start-ups, bankers, lenders, experts, lawyers, regulators, and community leaders are key ingredients for ongoing innovation in the tech industry. The book concludes with the sobering dissection of SVB's sudden death by $142 billion cuts inflicted by tech bros, social media, and the Federal Reserve Bank's successive interest rate hikes to squash the overheated economy.
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