Given its headquarters are in California, it should come as little surprise that Silicon Valley Bank (SVB) has continued to lead the field when it comes to catering to the venture capital and corporate venturing markets primarily as a commercial bank collecting deposits and lending money.
However, the complexities of navigating its connections means it is probably appropriate that a chess aficionado influences SVB’s investments. For the past 16 years, Aaron Gershenberg, who is on the board of America’s Foundation for Chess, has been managing partner of SVB Capital, which invests equity and currently has more than $2.5bn under management in eight funds of funds and three direct funds.
He said in his LinkedIn profile: “Our funds of funds focus on venture and are highly concentrated with eight to nine managers making up 80-90% of the fund. Our direct venture funds are top performers for their vintage – 2000 and 2006 – with both having realised returns of 2.5-times-plus net our limited partners.”
SVB has long been an integral cog in the venturing engine, with its advisory business supporting many of the largest players in the industry through data analytics insights. SVB also offers debt to VCs so they can to write cheques to their own funds and on individual deals, holds deposits for entrepreneurs closing rounds of investment and lending to them all, with warrants attached if required so the bank can share in the upside, and a fund-of-funds operation to commit to the best VCs or take equity.
The bank is seen as a trusted intermediary able to play any role required of it bar pure investment banking advice on flotations.
A quick glance at some of the hottest deals show SVB’s presence. It was in the G round for stem-cell cancer treatment provider Stemcentrx last year before its $10.2bn exit to AbbVie was announced last month, and it was a backer of last year’s GCV IPO of the Year award winner, FireEye.
Gershenberg’s first introduction to Silicon Valley was opening the San Francisco office for FirstCorp in the late 1990s. As he said in his profile: “I hired a team of five. We were one of Silicon Valley Bank’s largest clients. During this time, I partnered and competed with SVB and got to know the bank well. This was my first introduction to venture capital and where I built my network and understanding of the industry.”