Silicon Valley Bank UK was a bank that took tech seriously and famously helped fledgling businesses soar to success. They believed in the tenacity and ambition of startups, while most other banks overlooked the promise of the new and sat securely in the comfort of the old.
‘SVB UK customers can bank as usual’, says Noel Quinn, CEO of HSBC – the bank now taking over Silicon Valley Bank’s UK arm. But what about those that think ‘business as usual’ banking is broken and hoped for a backer that could keep up with the pace, innovation, and tenacity of UK entrepreneurs?
Plenty of institutional banks exist that satisfy businesses, but very few add value to entrepreneurs, let alone speak their language. That’s why we made a serious bid for SVB UK last weekend.
We’ve seen first-hand the hurdles entrepreneurs face during crucial growth milestones, and unfortunately, we’ve not seen many remedies for them within antiquated institutions. Banks have been around long enough now to adapt, so it’s not that they cannot find a solution – it’s more likely that they cannot see the problem standing in front of them.
As Michael Mortiz of Sequoia wrote in his piece for the Financial Times, SVB stayed close to its roots and its customers – when it collapsed, almost all of its customers were technology companies – a drop in the ocean for the bigger banks.
But was supporting ambitious SMEs and investors their Achilles heel? Despite what the headlines say, the answer is a resounding no. The issues that led to the Silicon Valley crisis were driven by their liquidity management bias to long-term securities, which lost value in an environment where interest rates continued to rise rapidly.
When we heard the news about its collapse, naturally, like many others, we were apprehensive and unnerved about the vast vacuum that would be left for the UK’s pool of emerging business talent. We worried about the negative implications it would cause for high-growth SMEs, specifically within the technology sector, which we are part of as a neobank and continue to support with our financial backing.
That’s why we were galvanised into action. It was an unmissable opportunity to show the UK’s business pioneers that OakNorth is still run by entrepreneurs, for entrepreneurs – and that only when they’re put at the forefront of growth can economies and communities flourish.
Since launching, we’ve leveraged our proprietary technology to lend faster, smarter, and more to businesses shut out by their high street banks throughout economic cycles. Our emphasis on technology at OakNorth means that we know the instrumental value it can have on economies, people, and places.
Being founder-led, we’ve never strayed from our mission. We applaud private investors and fund managers’ work finding and feeding emerging talent so that the UK can pave the way for innovation across critical sectors and disciplines – like life sciences and biotech – something now even more prescient in a post-pandemic world.
We build financing that unlocks the potential of entrepreneurs. Whether that’s by working alongside CFOs and founders directly or collaborating with leading venture investors, funds and other private investors who have found the next breakthrough trailblazer.
It shouldn’t be a herculean effort for businesses to find financing that complements their strategies. That’s why we honed in on debt, which was once fixed and rigid – the ‘magic glove’ of the lending world – one size, however, does not fit all. Our award-winning facilities are fluid and flexible, focusing on the entire financing lifecycle for funds and businesses.
We’re proud to continue trailblazing in the funds finance sector, being shortlisted again this year for ‘Funder of the Year’ by the DrawDown. Our Senior Debt Finance Director, Mohith Sondhi, understands the end-to-end strategy from asset to fund level, advising on some of our biggest deals within the sector to date. He shared his thoughts on what SVB’s customers will reflect on as they move forward:
“The HSBC takeover is not a bad short-term solution for SVB customers – they will no doubt feel both grateful and reassured that their funds are in safe hands to make payroll, pay vendors, and remain operational – BAU banking, you could say. But while the dust settles, there will be some vital inspection – diversification is the first and most apparent learning. As loyal as SVB may have been to tech businesses, moving forward, companies must spread the risk, looking at different specialist options for their capital, saving and equity needs.
The second point of deliberation will be harder to swallow – does an institutional bank like HSBC reflect startups and high-growth businesses? Does it provide the level of expertise and on-the-ground support to deliver bespoke financing within days and weeks like they’re used to? Can CFOs call their contacts day or night when things go off course, or timelines change? Only time will tell. In the meantime, for those that already know the answer to that, I and the team at OakNorth would love to talk.”
If you’re an entrepreneur, fund or private investor needing a different banking approach, get in touch today.
