Silicon Valley Bank, a “long-time specialist” in lending cash to startups and technology companies, is looking to increase its business in Canada. The report comes from the Financial Post’s Quentin Casey.
The news is interesting for any startup in Quebec and the rest of Canada. Bank loans for high-risk Internet startups are rarer than venture or angel capital. Silicon Valley Bank’s (SVB) managing director Win Bear told Casey that in Canada it’s been most active in Montreal, the greater Toronto area, Kitchener-Waterloo and Vancouver.
“It’s no secret that SVB continues to focus on global growth opportunities. We’re expected to be a growth story ourselves,” he said. “Canada is certainly a compelling market.”
Silicon Valley Bank was established in 1983 and focuses on innovation. Bear is based on Boston where he heads up the firm’s “Canadian growth effort.” The firm opened its first international office in 2004 and in 2012 it opened a U.K. branch. SVB also teamed up with a Shanghai bank to fund Chinese entrepreneurs.
According to Casey, the bulk of SVB’s business involves lending, or “venture debt.” As of the first quarter of this year, the bank had $44 billion in assets and an $18-billion loan portfolio. That portfolio grew by 23 per cent in 2014 and by 28 per cent in 2015.
Bear told the Post that traditional banks don’t focus on loaning money to startups and companies in the tech and life sciences industries. Yet this is “all we do,” said the CEO.
More venture debt for Canadian startups is something several players in the industry have been calling for for sometime, particularly those in more capital-intensive environments like cleantech and biotech.
Montreal-based Cycle Capital, a fund that focuses on Canadian cleantech ventures, hasn’t shied away from commenting. Founder Andrée-Lise Méthot specifically advocated for government venture debt in our recent chat with her.
“We need to have more support… through venture debt, which is crucial when startups want to scale up,” said Méthot.
For a company like Enerkem, which converts trash into clean fuels and chemicals, the cost of one plant is over $100 million dollars. To finance this kind of a portfolio company, Méthot called venture debt “crucial.”
Tell that to the countless other high-tech startups in Montreal and beyond who can’t convince a bank to loan them much-needed funds to grow their business.
Let’s hope SBV not only finds a fit in Canada, but in La Belle Province as well.
It has already helped a pair of Canadian companies expand, wrote Casey. SVB added venture debt to Toronto-based Q4 Inc’s $5 million series A round and Toronto-based Wave’s US$18.2 million Series B round. Wave’s U.S. banking is also run through SVB.