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Comment by batmaniam | Hacker News Reader

What made SVB so attractive to startup founders? All the news reports I'm reading is saying that's their target customer.

What advantages did SVB provide that other brand named bank didn't? Wouldn't it have been safer to put your startup's money in Bank of America, or JP Morgan, etc? I've never heard of SVB until the crash.

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They had good relationships with VC funds to top up portfolio companies with extra cash (debt).

SVB would be lenient to the entire portfolio in exchange for access to the best performing companies.

i.e. Company A is a Series A start-up that needs non-dilutive financing to bridge itself to the next round. SVB would be willing to lend when no one else would. In exchange, VC’s would introduce SVB to much healthier growth stage or pre-IPO companies that need a banking partner.

It was a lot of little things, but the main thing was that the understood startups so they would take into account your funding as well as your LOIs when making loan decisions, whereas most banks would not because they didn't understand them. That made it easier to get free cash when all of your startup's assets were basically owed money.

Or maybe the conservative old guard banks do understand, that startups without reliable cash flow, or on a growth-at-all-costs trajectory, are poor lending prospects. Seems whatever you claim that SVB "understood" led to its demise.

What appears to have led to the demise was when they branched out beyond startups into more traditional banking activities like mortgage backed securities.

Their primary business was making large loans to startups so they didn't have to sell shares to raise capital. Then it sounds like they leveraged that business to sell other financial products, e.g. mortgages etc

One other thing in recent years: if you used Stripe Atlas to get incorporated, they made it very easy to get an SVB account.

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