SVB Opens for Trading in U.K.

Silicon Valley Bank, a U.S. high-tech commercial bank, opened its first branch in the U.K. on Monday, an indication of the seriousness with which the valley is now taking European start-ups.
The 30-year-old bank, graded A-minus by Standard & Poor’s, focuses on technology, life sciences and clean-tech. The U.K. joins India, Israel and China in the bank’s international network.
SVB, with offices next to the Bank of England, has been operating in the U.K. for the last six years but hasn’t been able to offer full banking services. Clients include Shazam and  Mind Candy, makers of Moshi Monsters.
“We are not a universal bank that also does tech. Tech is all we do. This is our business. We are dedicated to the sector,” said Phil Cox, who heads the U.K. and Israel operation.
Mr. Cox said the U.K. was an attractive opportunity. “There have been challenges in the past around fund-raising and [venture-capital] activity but there are signs that the UK is doing relatively well in comparison to other places around the world.”
SVB Financial Group’s Silicon Valley Bank is a specialist for entrepreneurs, start-ups and venture-capital firms. In recent years the bank has been expanding abroad, following its customers and seizing on the underserved start-up niche.
Some 10% of the bank’s lending is early-stage, pure venture debt. Venture debt is a specialist form of high-risk lending to start-ups.
“Venture debt does not replace equity. If a company is putting £5 million in, for the right tech and investors, we might put £2 million of debt alongside them,” Mr. Cox said. “The company may have zero revenue. That debt is not going to be repaid by the company’s revenue because they don’t have any, but what it does do is to make the size of the cake £7 million instead of £5 million. It means they can achieve more. Therefore they will get a bigger valuation.”
The loan is repaid as the company grows from its start-up phase into a more mature entity.
Mr. Cox said the bank was looking at other European countries. “We are seriously ambitious in terms of creating something that spans the attractive markets in Europe,” he said.
SVB was founded in 1983. The bank’s main strategy was collecting deposits from businesses financed through venture capital. SVB expanded into banking and financing venture capitalists themselves, and added services aimed at allowing SVB to keep clients even as they mature from their start-up phase.

Source : http://blogs.wsj.com/tech-europe/2012/06/11/svb-opens-for-trading-in-u-k/