Embarking on the entrepreneurial journey – taking an idea and turning it into a growing business – takes guts. This long road to success is not as glamorous as the average person might assume. In fact, it’s often a rollercoaster ride filled with ups and downs, amidst a sea of stress and unknowns. And for the software-as-a-service (SaaS) entrepreneur seeking funding, all this gets compounded by the reality that most banks won’t fund SaaS companies.
That’s because SaaS companies don’t have the usual forms of collateral that banks recognize as valuable. Previously on The Startup Finance Blog, we explained:
Say you’re a SaaS company looking for a loan. Like most SaaS companies, you have pre-paid subscription-based revenue streams. Sounds great, but it’s teflon to a bank. Do you have inventory? Nope. AR? Nope. Other traditional hard assets like property, equipment, or raw materials? Virtually none. If you’re thinking, “But we have IP!” then kudos for thinking like an entrepreneur, but to a bank, IP is hard to value and nearly impossible to liquidate. The bankers will smile and politely refuse to lend against it.
So, what’s an enterprising SaaS founder to do? Is there a bank with open arms and the financial tools to help pre-VC tech startups grow? What is the best tech bank for financing startups? These are all important questions that we’ll clear up, putting your mind at ease when it comes to funding your startup.
Which tech bank should startups turn to for financing?
One option is to turn to people like us at Lighter Capital – alternative financing lenders that do things a little differently. We provide tech startups with quick access to non-dilutive growth capital. Our entrepreneur-friendly startup financing solutions range from revenue-based financing to term loans and lines of credit, with the aim of helping startups grow without taking equity or requiring personal guarantees. Yet what if you’re still interested in working with a tech bank in the early stages of growth, or if you’ve already got venture funding and need a bank that understands your business?
There are a variety of tech banks out there that are friendly to SaaS startups – or at least are trying to be – but the banking world still feels relatively hostile to SaaS founders. There’s a reason so much attention is placed on raising seed money from angel investors and ultimately raising a Series A round from venture capital investors: Funders of this type have stepped in to fill the void left by banks in the technology industry. (They also have scads of money, and they can turn startup founders into millionaires, in exchange for equity, but that’s a topic for another post.)
SaaS-oriented tech banks
Fortunately, one tech bank stands out like a beacon in this barren landscape: Lighter Capital partner Silicon Valley Bank (SVB). We teamed up with SVB to offer early stage tech companies like you access to debt capital and banking services – tailored specifically for your needs.
Silicon Valley Bank is a tech-focused institution that has been redefining the way tech banks fund startups since its founding in 1983. The concept was conceived over a hand of poker, when founders Biggerstaff and Robert Medearis, formerly Wells Fargo execs, discussed the lack of banks willing to lend to Silicon Valley’s burgeoning group of tech startups. SVB’s founding CEO, Roger Smith, guided the new institution into a practice of lending based not on assets and profits but, instead, on “innovation, dedication, and intelligent risk-taking.”
Fast forward 36 years and SVB has $60 billion in assets, makes $29 billion worth of loans, and has $141 billion in deposits and investments. It funds 50% of all venture capital-backed tech and life science companies in the U.S., and it funded 67% of all U.S. venture capital-backed companies that offered an IPO in 2018.
In the last decade, SVB has expanded all over the world, opening an Israel office in 2008, a U.K. branch and a joint venture in China in 2012, an Ireland office in 2016, a Germany office in 2018, and a Canada office and a global delivery center in India in 2019.
How does Silicon Valley Bank help tech startups?
So, what can this bank offer you, the tech startup founder looking for a little capital?
Silicon Valley Bank provides entrepreneurs with the financial tools to jump-start their business, including a checking account, business debit card, online banking, several wires each month, unlimited incoming ACH payments and more. SVB offers startups a variety of banking solutions – the SVB StartUp banking solution and the ScaleUp banking solution – and expands its offerings as those startups gain traction and build for scale.
Silicon Valley Bank’s lending is aimed at high-growth companies, particularly at companies that are already raising venture capital funding. So earlier-stage companies and founders who aren’t invested in rapid growth and VC money may still be a better fit for alternative financing from Lighter Capital. (In our recent industry report, The Rise of Revenue-Based Financing, we highlight how entrepreneurs are increasingly using revenue-based financing to delay or forgo equity rounds.)
For any tech company on a growth trajectory, even those with venture funding in the bank, you’ve finally found a tech bank ally – take a look at Silicon Valley Bank.
SVB and Lighter Capital Have Partnered to Help Pre-VC Tech Startups Grow
Driven by Lighter Capital’s online funding process and Silicon Valley Bank’s leadership in technology banking services, pre-VC funded startups now have a path to growth.
Learn how Lighter Capital’s non-dilutive funding and SVB’s financial tools will ignite your company’s growth, enabling you to achieve your next milestone while retaining ownership and control – starting with an exclusive 1% discount on your first Lighter Capital financing rate.
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