SVB took care of the technology when everyone else ignored us

The writer is a partner at Sequoia Capital

There is little to suggest that there is a connection between Siena, Tuscany’s most majestic hill town, and the plains of Santa Clara, the Northern California town that is home to the Great America theme park and Levi’s Stadium, home of the San Francisco 49ers. But there is a connection, and it has become painfully obvious in recent days.

In Siena, the coast of Monte dei Paschi di Siena has played a key role in the surrounding community since its foundation in 1472. In Santa Clara, Silicon Valley Bank – or SVB as it is called – has earned a reputation as one of the world’s pillars of the Silicon Valley Coast (or as it has come to be known). technology industry, since its opening in 1983.

The history and data of each bank are worlds apart. But since 2013, when Monte dei Paschi di Siena melted down and became a shadow of its former self, the local community has felt the sting. Businesses found it more difficult to access funding and many community organizations lost a vital source of support. Siena and the surrounding countryside are also poorer because of the bank’s problems.

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For those of us who have worked in the Silicon Valley for the past forty years, SVB has been our most important business partner. Up until this week, we always recommended to the founders, after deciding on a seed or venture investment, to immediately open a bank account with SVB. It is no coincidence that Stripe’s Atlas program, which allows non-US companies to set up a US company, used SVB as its bank. (Sequoia is Stripe’s largest investor.) Before SVB came to life, it was difficult, if not impossible, for a startup to establish a relationship with a large, established bank. Small West Coast technology companies were incomprehensible or insignificant to the big East Coast banks, whose clients included international airlines, heavy industry and national retailers. Our businesses, often founded by twenty-somethings, have been bypassed or ignored.

As technology penetrated every gap in the economy, SVB gradually followed. The bank opened offices where the entrepreneurial bug lived — both in the United States and overseas. Like all of us, SVB has had its ups and downs, but for the most part it has stuck to the tie, and its fortunes have mirrored those of its fledgling economy.

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In a perverse way, SVB paid a price for its loyalty. Much will be said about the reasons for its demise, but few will address what made it special for us in Silicon Valley. SVB stayed close to its roots and customers. When it collapsed, almost all of its 40,000 customers were technology companies — a trickle down the line for big banks.

SVB was like the cherished local market, where the people behind the counters know their customers’ names, smile, but still charge the going price when selling a piece of meat. When a small tech business was struggling, we knew we’d get a sympathetic hearing, but we also knew we’d have to pay the piper.

In the broader Silicon Valley community, SVB and its many employees could always be counted on to quietly and modestly provide support to students applying to college, tend to community gardens, supply food banks, or provide companionship to the elderly.

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I’m sure a lot of people will be looking at his demise and the ungodly amount of fearmongering on social media and chuckling gleefully at the recent beating the tech industry has taken. So be it. We do not ask for special treatment or handouts. When a bank fails—even if it’s our bank—that’s the price we pay for living in an economy where success is rewarded and missteps are punished. But if adequate steps are not taken to ensure that tens of thousands of entrepreneurs cannot meet their payroll and other obligations, the United States will significantly weaken many pioneering technologies.

Yet when a community loses its bank, whether in a Tuscan hill town or on the Pacific coast, it’s like a family dying. Once again, the fate of thousands of small technology companies and the life force of the start-up economy will be in the hands of foreigners, and the USA will be all the poorer.