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Notes -
Do you know why they all flocked to this particular bank in the first place? I can only assume that they we’re getting more favorable terms than they would receive at Wells Fargo or somewhere else.
Edit: nvm someone else answered this elsewhere
This tweet thread explains it well: https://twitter.com/jonwu_/status/1634250754486857729
Highlights:
"Say you're a founder (or VC) with a bunch of illiquid but sure-to-be-worth-something-someday startup equity or fund carry, and you need a house.
Typical mortgage lenders won't help you.
But SVB will, at the same insanely good terms they're known for in the venture debt world."
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Because SVB understood startups, understood their business, their requirements, the realities of funding, of cash churn/spend, knew all entities involved in SV startup scene, from VCs, through insurance brokers, to startup lawyers etc, and do their business operations were very explicitly tailored for needs of SV startups. Their advice was extremely useful, often nearly as much as the actual financial services they offered, and as a result many if not most VCs explicitly encouraged their startups to bank there.
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Apparantly they offered better terms as well as tolerated the flexibility that startup payrolls and accounts receiving typically end up needing much more.
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