An ode to banks that support entrepreneurs
Now that the FDIC has agreed to protect depositors at Silicon Valley Bank and other banks, the startup ecosystem can breathe a sigh of relief.
It’s also time to give a shout out and heartfelt thanks to the banks that support early-stage entrepreneurs.
These banks – including not just Bay Area stalwarts like First Republic Bank, but also Midwest regional banks like Bell Bank, Choice Bank, and Bremer Bank – will bank companies that the big banks won’t touch. I have been a client of all of these banks at various times over the past 10+ years, and I’ve referred dozens of founders to these and similar banks.
Why? Because they’ll bank startups and small businesses just getting off the ground. They’ll bank the new players who are trying to change the VC and startup industry landscape for the better. They’ll provide lines of credit to small business owners with demand but not enough funds for production. Let’s not take this for granted.
As an example, over the weekend as part of Tundra Ventures’ due diligence to diversify our bank accounts (which we still plan to do as a precautionary measure and have recommended our portcos do as well), I talked with a banker at one of the Big Four banks.
This banker was extremely nice, but they delivered some bad news:
They usually do business only with funds that are over $500M. (In contrast, Tundra is raising a sub-$10M first fund);
If we wanted our fund to bank with them, all of the founders of the fund had to move over their *personal assets* to this Big Four bank;
It would take at least a week to open an account; and
There was no guarantee that we could even open an account even after agreeing to transfer personal assets, etc. because the bankers had to present our case to their executive committee, who could approve or deny our account at their discretion.
So basically Tundra had no chance of getting an account at this Big Four bank.
In contrast, when we reached out to a banker at a local bank we knew from the MSP community, we had two emails in our inbox within the hour connecting us to their team, letting us know what information they needed to get started, and promising that as long as we could provide the required information, we could get an account opened within 24 hours.
We need the regional and community banks.
We need the personal relationships.
When it’s about more than just the money, when it’s about opportunity and not just risk, and when it’s about trust and relationships, we need that bank that actually gets it.
After my own experiences with various banks as an entrepreneur and as an attorney, I always recommend that founders start with a smaller bank that has experience working with startups.
More specifically, I always try to introduce founders to specific humans who work at those banks. Because it’s the actual human banker who is going to help you when you have an weird issue you can’t figure out, when you need a new line of credit, or when you are trying to figure out how SBA loans work.
When you find a banker who will help you understand what you need to successfully secure the financing your company needs, that relationship is pure gold.
I’m grateful that the federal government (allegedly without the use of taxpayer dollars) is going to protect not just the depositors at SVB – many of whom are startups who struggle to make payroll each month – but also the depositors at other small banks who were at risk if this financial crisis at SVB spiraled out of control into the larger ecosystem.
If you have a special banker in your life who has helped you get started on your entrepreneurial journey, reach out and say thank you today.