Medearis and his two cofounders of Silicon Valley Bank wished to tackle the antiquated banking practices that led to a massive reduction in the number of banks, the disappearance of community banks, and the mergers of Big Banks. Bank regulations and culture prevent banks from embracing tech startups and entrepreneurs as lending clients. The SVB founders knew about Bank of America’s abandonment of its early tech lending, missed opportunities, and bank failures to capture tech startups and entrepreneurs. The old, conservative banking environment during the early days of the tech sector presented the founders with an opportunity.

The unique success enjoyed by Silicon Valley Bank was the result of a long process that began at the vision of the bank by the original three founders, Medearis, Biggerstaff, and Smith. The key to success involved convincing the regulators to establish a bank for the tech sector. Educating the regulators required ongoing efforts in the first decade and thereafter. SVB lenders, including Harry Kellogg, convinced the regulators about the efficacy of tech lending.1

Banks know that customers hate them. That is the headline from a CNN Business report from a survey of banking executives.1 The financial crisis of 2008 engraved stains on banks that more than 80 percent of managers at banks, brokerages, and other financial services firms believe continue to have a negative impact on their companies. JPMorgan Chase, Bank of America, and Citigroup saw their biggest fall in reputation. Their names stayed in the headlines for settlements with the regulators reaching billions. Regulators imposed hefty fines against banks in 2021: Capital One, $390 million; Deutsche Bank, $130 million; Julius Baer, $79 million; Apple Bank for Savings, $12.5 million.2 The total fines against big banks in the United States in 2020 escalated to more than $11 billion, including the largest single fine issued against Goldman Sachs ($3.9 billion) and the second largest against Wells Fargo ($3 billion).3

The unconventional approaches Silicon Valley Bank adopted in the early years challenged banking culture. SVB transformed into one of the largest fifteen banks in the United States by serving exclusively tech companies in innovation centers across the nation.1 SVB was the startup, cheerleader, and connector to and for its clients in the tech sector.

Bob Medearis, Roger Smith, and Bill Biggerstaff founded Silicon Valley Bank in 1983. Smith ran the Bank as a startup business in the first decade. Subsequent CEO John Dean restructured the Bank and Ken Wilcox redirected the Bank with a central focus on exclusively serving the tech community. Greg Becker accelerated the Bank, connecting its past to the future. The bank’s assets grew at a fast pace during the pandemic. Becker tripled the size of the bank between 2019 and 2022.

Roger Smith and his bankers from Wells Fargo’s Special Industries Group brought their experience in tech lending to Silicon Valley Bank (SVB). According to Smith, Bank of America (BOA) was the first bank to take warrants for the right to purchase shares as part of the loan cost that they charged tech companies who were backed by Venture Capitalists (VCs) in Silicon Valley’s early days. After both Bank of America and Wells Fargo exited tech lending, SVB became the sought-after bank for lending to tech companies. SVB perfected its tech lending practice to startups that were VC-funded entities. This practice would later be called venture lending, venture loans, or venture debts in the United States and overseas.1

A myth started several years ago and still floats around concerning the origin of Silicon Valley Bank (SVB). The myth goes that the idea of the Bank popped up at a poker game where important men in the Valley got together during one of their outings to play their favorite game. Like a good poker game, the story was told with a straight face. And, as in any good poker game, someone is bluffing. A bluff is a hand that is not the best hand but possesses the power to induce at least one opponent with a better hand to fold first. The poker game origin of SVB is a good bluff perpetuated by SVB’s video clips posted on YouTube.1

The Black Lives Matter movement and the pandemic propelled many financial institutions, including banks, to adopt Environment, Social, and Governance (ESG) principles. Banks disclosed their metrics in various reports showing that they were somewhat implementing efforts to address ESG in their business, operations, and management.

Roger Smith and Harry Kellogg frequently remarked that Silicon Valley Bank (SVB) was all about relationships. The statement sounds like a cliché but until one truly absorbs its meaning it does not resonate and may soon be forgotten as relationships are challenging to understand, cultivate, and nurture strategically. Relationships with marquee VC firms and tech startups in the VC ecosystem were what set SVB apart from public venture lenders, private venture lenders, and other banks that dared to compete in venture debt lending. SVB bankers worked hard at building relationships and expanding the products and services to capture 100 percent of the VC ecosystem. The path was not always smooth, but the bankers tried; they finessed the edges and founded SVB Capital, SVB Premium Wine, and SVB Securities. Peculiarly, no bank rivalled to SVB on its path of expansion.

Apple Computer, Inc. released its “Think Different” campaign in 1997 to mark the return of Steve Jobs and to resurrect the struggling computer company. The Think Different campaign “got an audience that once thought of Apple as semi-cool, but semi-stupid to suddenly think about the brand in a whole new way.”1 Interestingly, be different is what Silicon Valley Bank (SVB) embraced and practiced from its beginning in 1983. The Bank distinguished itself from the crowded banking sector by serving entrepreneurs in the region since the early 1980s. At the time SVB was formed and officially named, “Silicon Valley” was considered unattractive for banking to capture the public attention and adopted the available moniker.

The three founders of Silicon Valley Bank (SVB) epitomize Californian determination and pragmatism. Medearis, the Stanford professor, who for ten years listened to his students struggling to obtain loans, decided to float an idea of a community bank for tech companies. The professor sought out a banking consultant who brought in a bank executive who carried his dream of founding his own bank, the trio together established a community bank for tech. Their backgrounds and convictions illuminate the startup spirit synonymous with Silicon Valley. Their journey led them to select what was then an uncommon name, Silicon Valley Bank, in 1983.