Wells Fargo, a New York-listed bank, has set up a commercial banking group for venture capital (VC)-backed companies in San Jose, California, as part of a potential doubling in its team over the next few years as peers also continue to expand.
Rob Fernandez will lead the team of six in San Jose, which has about 350 to 400 venture-backed companies in the region, while Well Fargo has 12 people in Palo Alto and eight in Southern California.
Eric Houser, regional vice-president for Wells Fargo’s Technology and Commercial Banking Group, which was started more than a decade ago and has provided $1.6bn in financial services for 500 companies, said the San Jose team would probably double over the next few years while the whole team could expand by 1.5 to two times.
He added in a statement: "Our new San Jose team builds on our commitment to this sector by focusing on emerging, VC-backed companies that we’d like to support over time with a variety of commercial banking and investment banking services.
"Wells Fargo currently has banking relations with more than 65% of Silicon Valley 150 companies [the largest, listed technology companies according to news provider Mercury News]."
He said these relationships had been formed when the technology companies had been private and it wanted to maintain its flow of business from early to late-stage companies.
Houser said the desire by private companies to expand internationally from launch was an opportunity for large banks, such as Wells Fargo with $1.2 trillion in assets and 280,000 employees, against regional specialists.
Other venture debt lenders are also expanding. US-listed SVB Financial, the parent of Silicon Valley Bank, is applying for banking licences in China and India and expected to receive its UK authorisation and formally begin marketing in January.
SVB has a joint venture, which is subject to regulatory approval, in China with Shanghai Pudong Development Bank and invested in local companies Zhejiang Uni-power Guaranty and Zero2IPO Group, and venture capital funds, according to newswire Reuters.
"In China, we’ve announced a joint venture, and our goal is to get a banking licence there, and the same in India [where it operates a non-banking financial company]," Greg Becker, chief executive of SVB, told Reuters and added it was expanding into wealth management.
A third venture debt provider in the US, Comerica Bank, has also been active and this month increased venture capital-backed Nexx Systems’ year-old credit facility by $11m to $23m, according to news provider Dow Jones VentureWire.