By one estimate, the bank served between a third and a half of the UK’s “innovation economy”.īut that concentration had a downside. Unlike typical small businesses, they don’t tend to be interested in business loans, and may not even bring in any revenue for years after they begin paying staff.įocusing on those odd customers allowed SVB’s UK branch to balloon to almost £7bn in deposits by Friday, according to the Financial Times. They take large sums of money and then sit on them for months or years, slowly spending them down as they grow larger and larger. One venture capitalist described trying to open a bank account for a portfolio company at Barclays and being told they were limited to a debit card, a chequebook, and a single director – even while the company itself had 10 employees and a huge cash investment waiting to be spent.Įarly-stage startups have other unique characteristics, all of which SVB turned itself to serving. A company with barely any revenue and only a few months of accounts to its name would struggle to open a corporate account, let alone access complex financial services. The bank specialised in high-growth startups, solving problems that other banks wouldn’t touch.

In absolute numbers that’s comparatively small: in the UK, the first £85,000 deposited is covered by insurance, so SVB could have hit it with only a couple of thousand clients.īut in the UK, as in the US, those small businesses were unique. In 2022, the UK branch was required to become a subsidiary bank in its own right, after it hit a threshold of £100m of insured deposits.

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