In a world ever-more focused on transactions and digitisation what place is there for relationship-banking? Apparently not a lot, yet the market-leader – SVB – wholly embraces this approach over the whole journey from Startup to FTSE. In this show we discuss what relationship banking means in the 21stC for one of the hottest sectors in the market.
SVB is the commercial bank for high growth companies and the biggest banker for PE/VC firms. In the UK they have 4,000 clients, over one thousand of which are pre-series A. As we heard in LFP163 SVB are also the world leaders in Venture Debt.
Tom Butterworth is the Head of Early Stage at SVB in London and joins us today to talk about the importance of relationship-banking, of looking after the customer and of viewing the financial aspect of the relationship across the whole life cycle of high growth companies.
We discuss how serving a vertical can enhance the clients in many ways as well as produce the deal flow to make the approach commercially viable – knowing a single sector in great depth leading to, inter alia, a much deeper understanding of credit-risk than simply putting numbers in a spreadsheet.
Topics discussed in this show include:
- lockdown-look through “back to the office” back to lockdown look?
- the business challenges of extended lockdown
- the staff challenges of extended lockdown
- ******SUPER-IMPORTANT for everyone – firms and folks – shout-out to look after your people’s/your mental/emotional/physical health******
- Tom’s career journey
- how careers suddenly seem to take off and one is in a strong updraft
- Tom’s attraction to the entrepreneurial market leading to him being head-hunted when SVB was still small in London
- banking over the lifetime of a growth company
- “It is probably easier to be a Premier League footballer than to be an incredibly successful entrepreneur, it is one of the most difficult things one can possibly do.”
- lifestyle vs growth/innovation businesses
- switching banks is very tedious and time-consuming – case for choosing a bank that can support you over your whole life-cycle
- in this context one can view a relationship-orientated bank as part of your suite of professional advisers alongside accountants and lawyers
- what is the value-add from the likes of a SVB?
- how SVB help and support their clients above and beyond banking
- “you should give before you get”
- the complex needs and suites of products that more successful growth companies need
- complex specialisations in growth banking – eg lending specifically against marketing
- comparison with old-world Merchant Banks (pre-trading and stripped of investment management)
- the reason clients pick SVB is for the relationship-management and for the specialised suite of products
- cf MegaBanks which “do everything” – SVB is rather “an inch wide and a mile deep”
- the bad-name “relationship-banking” has as it is misused sometimes as a spin on product-push, sales-target-drive FS sales drive approach
- the role of the relationship manager
- “having someone to speak to is much better than a chat bot”
- SVB as a bank high-growth cos should check-out to see whether they are the relevant choice for a given firm or not
And much much more 🙂
Share and enjoy!