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TRANSCRIPTION WITH SPEAKERS
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[00:00] SPEAKER_03: Welcome to Canada's podcast.
[00:07] SPEAKER_02: At Silicon Valley Bank, we help innovative technology and life science companies grow.
[00:13] SPEAKER_02: If you're ready to take your next step, discover how Silicon Valley banks founder friendly financial solutions, industry insights, and connections can help you move your bold ideas forward.
[00:25] SPEAKER_02: Fast.
[00:26] SPEAKER_02: O2, www.svb.com slash Canada slash connect.
[00:34] SPEAKER_02: Take your next step with Silicon Valley Bank.
[00:38] SPEAKER_03: Hi, this is Angela Faye from Canada's podcast.
[00:42] SPEAKER_03: Today, access to affordable capital to start or grow business is a number one consideration for any entrepreneur or business owner.
[00:50] SPEAKER_03: Banks are an obvious solution.
[00:53] SPEAKER_03: Choosing a bank or capital partner is a critical decision to today.
[00:57] SPEAKER_03: We're providing you some insights on a relatively new business in the Canadian finance scene.
[01:02] SPEAKER_03: Silicon Valley Bank.
[01:04] SPEAKER_03: So we're talking about why Canadian should invest and borrow from Silicon Valley Bank.
[01:09] SPEAKER_03: We'll be looking at what are the internal workings of how svb works, what makes them unique and some Canadian finance venture tech trends.
[01:19] SPEAKER_03: And who better to talk about those things with us, but Katarina Papadacos.
[01:25] SPEAKER_03: Katarina is a holds a BA in political science from the University of Victoria and an MPA for the University of BC's Sauderd School of Business.
[01:35] SPEAKER_03: She volunteers as a member of Care Canada Vancouver Council supporting and helping women and girls and their families get out of poverty in developing countries.
[01:46] SPEAKER_03: She lives here in Vancouver with her husband and son enjoying snowboarding, paddle boarding and hiking locally.
[01:52] SPEAKER_03: And of course, experience culture, food and landscapes globally, most recently in the South Africa's Calla Hari Desert.
[02:00] SPEAKER_03: Katarina also leads the technology banking effort of svb in Western Canada.
[02:06] SPEAKER_03: Before joining in 2020, she served as the director of Expresso Capital where she led venture debt financing for tech companies in Western Canada and opened new US markets for the firm.
[02:18] SPEAKER_03: Katarina was also director for the technology and innovation group BMO and launched the bank's technology lending program in BC.
[02:26] SPEAKER_03: She has had roles in trade and invest BC where she's helped businesses in the province develop their export and foreign investment strategies.
[02:34] SPEAKER_03: Katarina, welcome to Canada's podcast.
[02:38] SPEAKER_03: Thank you. Great to be here.
[02:40] SPEAKER_03: Thank you. No, I'm curious. What attracts you to the work you do both previously and now with svp?
[02:47] SPEAKER_01: Yeah, I think there's some differences in the roles I've had over the last 10, 15 years.
[02:54] SPEAKER_01: But then there's some common threads that sort of connect the experiences.
[02:59] SPEAKER_01: And I think one of the main common threads is just working with entrepreneurs, companies, you know, people that are passionate about growing their business and, you know, making disruptive changes in their industry.
[03:13] SPEAKER_01: So I think that's something that I find really exciting and I love sort of getting close to the action, you know, working with those entrepreneurs and their teams starting from very early stage and then growing throughout their life cycle to, you know, when they have a big exit or some, you know, big outcome and just being part of that journey with them.
[03:34] SPEAKER_03: Awesome. Well, I don't want to get into a little bit about how Silicon Valley bank works itself, you know, our traditional idea of a bank is maybe bricks and mortar outlets and communities.
[03:45] SPEAKER_03: And where you can bank with or without a business. So can you give us some insight does svb do any personal banking? Do you have outlets? How do you work?
[03:55] SPEAKER_01: So svb in Canada is a lending branch. So our main objective in Canada is to lend to tech companies at various stages.
[04:07] SPEAKER_01: We are also a global bank. So in other jurisdictions like the US and the UK and others, we have more of a broader commercial banking offering.
[04:15] SPEAKER_01: So some of those companies in those areas will have their kind of business operating using svb as their primary bank.
[04:27] SPEAKER_01: From a personal banking perspective, we've got private banking in some areas as well. So we acquired Boston private in the US last year.
[04:37] SPEAKER_01: And so, you know, there's a little bit of that. But in Canada, we are really focused on lending to Canadian tech companies.
[04:46] SPEAKER_03: So we're really more of a Silicon Valley lending institution right here in Canada.
[04:54] SPEAKER_03: Okay. And do you do any commercial industrial mortgages as well or is it really just operations lending?
[05:03] SPEAKER_01: Yeah, we don't really have sort of mortgage products per se. I mean, a lot of companies can choose to use the funds that we lend them for different purposes.
[05:14] SPEAKER_01: So our loans are really flexible and help companies achieve what they're trying to achieve.
[05:21] SPEAKER_01: Even so, there's some loan types that are very specifically aligned with like accounts receivable or whatever.
[05:29] SPEAKER_01: But then there's others that are more broad. And so, you know, in those cases, companies might use funds to purchase equipment or have more of the traditional investments in their business.
[05:43] SPEAKER_03: Well, and I mean, do you have any credit card associations as well as that that part of your offer?
[05:49] SPEAKER_01: In the US, we've got a corporate card. So actually a lot of Canadian companies also use us for their US banking and US credit cards. So we do have that. And we're, you know, always looking at how we want to expand our product offering in Canada. But right now we don't have that.
[06:09] SPEAKER_03: Well, and I mean, in my experience here on Canada's podcast and interviewing lots of companies globally looking to do business in Canada and Canadians looking to do business abroad. We have a reputation, if you like, as Canadians for being safe to do business here.
[06:24] SPEAKER_03: So does SVB offer any loan dRTs or your government assured? Is there anything that sort of reinforces that trust breathiness in how you operate?
[06:35] SPEAKER_01: Yeah, I think we know we don't have, we're not a traditional lender from that point of view where, you know, they want to have two or three ways, you know, out of a deal. And so they want to have, you know, your cash flow and your house and you know, like so we're not operating like that.
[06:54] SPEAKER_01: We, we're in the innovation sector. And so we have our own model of how we assess risk and what amount of debt is the right amount for a company. And so we're really more focused on growth, helping companies grow and expand and working with them as well as their investors to be part of that. And so we don't have the same lens, I guess, as, you know, more of that traditional kind of lender.
[07:21] SPEAKER_03: Well, and let's talk a little bit about that lens. Just to give me a little bit of insight on how you review evaluate business loans and perhaps we could do that by, you know, talking, talking through the process of how say a startup entrepreneur who is maybe under, you know, the first million dollar roll out to the growth stage companies.
[07:45] SPEAKER_03: What would be the process in each one of those scenarios from with through the SVB lens.
[07:51] SPEAKER_01: Yeah, so we work with companies at all stages. We've got different resources and support at different stages. So we want to get to no founders as early as possible and understand what they're trying to achieve and and try to help in any way we can. So usually early stage.
[08:10] SPEAKER_01: You know, prior to companies raising an institutional round of investment, we're usually more providing other types of support like introductions connections.
[08:23] SPEAKER_01: We've got a lot of information and like, you know, for example webinars and other types of things that give education to those founders as far as like, hey, you know, learn from learn from the kind of others that have done it before.
[08:39] SPEAKER_01: And don't sort of feel like you're alone and you have to figure it out yourself. So anything from how to how to fundraise, how to evaluate term sheets, how to, you know, all of these different things.
[08:50] SPEAKER_01: We're helping that our education kind of gets founders there a little bit quicker. And then once they raise an institutional round, whether it's like a seed round or, you know, in many cases, series a.
[09:03] SPEAKER_01: And力, that's what we start to look at the debt offering.
[09:09] SPEAKER_01: So that's usually, you know, starting out just with with some initial debt and then looking to grow our relationship with the customer and the client overtime just like, you know, starting out, you know, based on their fundraising, that they've done.
[09:26] SPEAKER_01: they might qualify for something like a million dollars.
[09:29] SPEAKER_01: And the idea is as they spend that as they grow the business
[09:32] SPEAKER_01: and as they mature as a company,
[09:35] SPEAKER_01: that one million dollar might turn into,
[09:38] SPEAKER_01: you know, three, four, five, 10, 20 over time.
[09:42] SPEAKER_01: So we want to continue to fund businesses
[09:44] SPEAKER_01: through their life cycles.
[09:47] SPEAKER_03: Well, that's a great segue.
[09:49] SPEAKER_03: And you know, the question I think is everybody wants to ask,
[09:52] SPEAKER_03: and I know it might not be politically correct to ask,
[09:54] SPEAKER_03: but what are your interest rates and sort of terms
[09:57] SPEAKER_03: on a typical debt financing loan?
[10:00] SPEAKER_01: Yeah, so we have rates that are like,
[10:04] SPEAKER_01: so all Canadian banks, let's say,
[10:06] SPEAKER_01: are considered like senior lenders.
[10:09] SPEAKER_01: So, you know, we're in the same range.
[10:12] SPEAKER_01: So as what you would find like at any bank.
[10:15] SPEAKER_01: So it depends, everybody's got like their own risk profile
[10:19] SPEAKER_01: for a certain company.
[10:21] SPEAKER_01: So it's not like a standard number
[10:23] SPEAKER_01: where everybody's going to get the exact same amount,
[10:26] SPEAKER_01: but it's, you know, call it like mid single digit interest rate.
[10:31] SPEAKER_01: And then, you know, we also have other types of debt products
[10:35] SPEAKER_01: that are more like junior debt products
[10:38] SPEAKER_01: that are a bit more expensive,
[10:40] SPEAKER_01: but the risk profile of that tranche of debt is much higher.
[10:45] SPEAKER_01: So normally what you do is you look at how much a company
[10:49] SPEAKER_01: qualifies for and you give them a certain amount
[10:52] SPEAKER_01: at sort of that senior debt pricing.
[10:54] SPEAKER_01: And then if they're looking for more than that,
[10:57] SPEAKER_01: we see if they qualify for that.
[10:58] SPEAKER_01: And then, you know, it's that's priced a little bit higher.
[11:02] SPEAKER_03: Katerina, how do you advertise at this point?
[11:04] SPEAKER_03: How are you connecting with with potential clients?
[11:07] SPEAKER_01: Yeah, so we are, I mean, I think all of us
[11:11] SPEAKER_01: that are on the team have our own networks
[11:13] SPEAKER_01: and have been around for a while.
[11:15] SPEAKER_01: And so especially during the pandemic,
[11:18] SPEAKER_01: you know, there's a lot of people that are really relying
[11:21] SPEAKER_01: on some of those networks.
[11:22] SPEAKER_01: And, you know, people know what we do.
[11:25] SPEAKER_01: They have clients that they're trying to support
[11:28] SPEAKER_01: and we sort of share introductions that way.
[11:30] SPEAKER_01: So that's definitely a big source of new connections
[11:35] SPEAKER_01: and relationships.
[11:37] SPEAKER_01: I think we, you know, we have some campaigns
[11:40] SPEAKER_01: of like putting content out there and stuff like that.
[11:43] SPEAKER_01: But, you know, we've, I think most of the time
[11:47] SPEAKER_01: because of the types of companies we work with
[11:49] SPEAKER_01: and they're very connected to the sort of the venture space.
[11:53] SPEAKER_01: Like companies get plugged into that
[11:55] SPEAKER_01: and then they find, you know, that it's actually
[11:58] SPEAKER_01: a pretty small community and most people kind of know each other.
[12:01] SPEAKER_01: And so, you know, if a company comes to me and they say,
[12:04] SPEAKER_01: hey, I'm looking for this.
[12:06] SPEAKER_01: And, you know, whether or not they qualify for that,
[12:09] SPEAKER_01: I also can say, hey, you know what,
[12:12] SPEAKER_01: you should talk to this person or that person.
[12:14] SPEAKER_01: Or, you know, like this is kind of a good next step for you.
[12:19] SPEAKER_01: So I think just getting plugged into someone
[12:22] SPEAKER_01: in the innovation community is really helpful.
[12:26] SPEAKER_01: And then from there, use them and their connections
[12:29] SPEAKER_01: and their networks to kind of, you know, continue on.
[12:33] SPEAKER_03: So let's just talk about the size of your network at the moment.
[12:36] SPEAKER_03: I mean, Silicon Valley Bank came to Canada
[12:39] SPEAKER_03: and not that long ago in 2019.
[12:41] SPEAKER_03: You've been on board since 2020.
[12:43] SPEAKER_03: So how big is your team and what kind of, you know,
[12:47] SPEAKER_03: breadth do they have across Canada?
[12:49] SPEAKER_01: Yeah, so we've grown our team considerably
[12:51] SPEAKER_01: over the last couple of years.
[12:53] SPEAKER_01: Now we're about 40 across Canada and continuing to grow.
[12:58] SPEAKER_01: Yeah, and we've got certain individuals that are focused on
[13:01] SPEAKER_01: working directly with companies,
[13:03] SPEAKER_01: others that are focused on working directly
[13:05] SPEAKER_01: with venture capital funds and private equity funds.
[13:09] SPEAKER_01: We've got sort of the underwriting teams.
[13:12] SPEAKER_01: We've got a variety of people that are there to support our clients.
[13:17] SPEAKER_01: So we, you know, we're not the kind of bank
[13:19] SPEAKER_01: where we're going to tell you, here's a 1-800 number
[13:21] SPEAKER_01: and like, good luck.
[13:23] SPEAKER_01: You know, like, actually, we've been,
[13:25] SPEAKER_01: it's been like noted by a number of clients
[13:27] SPEAKER_01: where they actually find it like surprising
[13:29] SPEAKER_01: how many actual people are there that they could call,
[13:34] SPEAKER_01: you know, if they need something.
[13:36] SPEAKER_01: So I think even though maybe 40 people
[13:39] SPEAKER_01: is in a massive number, it is definitely,
[13:42] SPEAKER_01: you know, our focus to support companies
[13:45] SPEAKER_01: and be available at all times.
[13:47] SPEAKER_03: I'm a little bit curious about a comment
[13:49] SPEAKER_03: that you said where you've got some,
[13:50] SPEAKER_03: I'm imagining, you know, traditional account managers
[13:53] SPEAKER_03: that have a portfolio of clients.
[13:55] SPEAKER_03: But you also mentioned that you have sort of
[13:58] SPEAKER_03: some representatives that are working exclusively
[14:01] SPEAKER_03: with venture debt companies.
[14:03] SPEAKER_03: How does that work?
[14:04] SPEAKER_03: Who are they?
[14:05] SPEAKER_03: And what are they looking at financing as a collection?
[14:09] SPEAKER_01: The VC, the folks that are working with VCs, yeah.
[14:12] SPEAKER_01: So there's two sort of approaches.
[14:17] SPEAKER_01: One is looking at building relationships with VCs
[14:20] SPEAKER_01: because we bank and we fund so many of their portfolio companies.
[14:25] SPEAKER_01: And so we need to have sort of a direct connection
[14:29] SPEAKER_01: with those investors to make sure that we're aligned
[14:32] SPEAKER_01: and we're, you know, supporting them as well.
[14:36] SPEAKER_01: And then we also have fund banking
[14:39] SPEAKER_01: as so like we'll actually lend money
[14:42] SPEAKER_01: to venture capital funds in addition
[14:46] SPEAKER_01: to just their portfolio companies.
[14:48] SPEAKER_03: Okay.
[14:49] SPEAKER_03: Interesting.
[14:49] SPEAKER_03: So direct to the portfolio companies
[14:51] SPEAKER_03: but to the funds themselves.
[14:54] SPEAKER_03: Exactly.
[14:54] Speaker UNKNOWN: Funds must.
[14:55] SPEAKER_03: I'm a little,
[14:57] SPEAKER_03: and of course, that's a curiosity for me.
[14:59] SPEAKER_03: So is it a relationship strategy
[15:04] SPEAKER_03: and risk-renext-and-strategy
[15:05] SPEAKER_03: or all of the above to actually partner
[15:07] SPEAKER_03: with VCs specifically?
[15:12] SPEAKER_01: I think, yeah, maybe all of the above.
[15:16] SPEAKER_01: Like I think it's, it is a relationship strategy
[15:21] SPEAKER_01: because, you know, once the money is out the door,
[15:24] SPEAKER_01: like you need to make sure that whoever is
[15:27] SPEAKER_01: on the other side of that is trustworthy and reliable
[15:31] SPEAKER_01: and, you know, it's going to be accountable and all of that.
[15:35] SPEAKER_01: And so when they do have a VC sponsor
[15:39] SPEAKER_01: that's invested in the company,
[15:42] SPEAKER_01: they have some diligence that they've already done
[15:45] SPEAKER_01: on the founders and the team and the technology and all of that.
[15:50] SPEAKER_01: So, you know, we, the ones that we have a good relationship with,
[15:54] SPEAKER_01: we kind of know some of the vetting that they've done.
[15:58] SPEAKER_01: They're also looking at, for their portfolios,
[16:01] SPEAKER_01: they're looking at like which companies are going to lead the category
[16:04] SPEAKER_01: or which companies, you know, they're picking to be the kind of leaders
[16:08] SPEAKER_01: in their sector.
[16:09] SPEAKER_01: And so, you know, they're really smart people
[16:13] SPEAKER_01: and we think like they have, you know,
[16:16] SPEAKER_01: the responsibility of their funds to deploy.
[16:19] SPEAKER_01: So, you know, we definitely take that as one as a factor as well.
[16:25] SPEAKER_01: So, the relationship is important.
[16:29] SPEAKER_01: And then, you know, if you have various capital providers
[16:31] SPEAKER_01: around the table when things inevitably go,
[16:34] SPEAKER_01: not exactly as planned, you know, you have others
[16:37] SPEAKER_01: that we can all come together and come up with a solution.
[16:40] SPEAKER_01: So, that is certainly like a bit of a risk reduction scenario.
[16:45] SPEAKER_03: So, we, I wanted to talk a little bit about how Silicon Valley Bank is unique.
[16:50] SPEAKER_03: And we've already talked a little bit and highlighted, you know,
[16:53] SPEAKER_03: the relationships with venture capital firms
[16:55] SPEAKER_03: that where there's a little bit more of a network support
[17:00] SPEAKER_03: from multiple, you know, supporters that are all already,
[17:06] SPEAKER_03: you've highlighted those as making it unique.
[17:08] SPEAKER_03: But the finance landscape in Canada, I mean,
[17:12] SPEAKER_03: we have the five big banks, we have credit unions,
[17:14] SPEAKER_03: we have provincial and national even public banks.
[17:17] SPEAKER_03: So, I'm curious how you see Silicon Valley Bank fitting in,
[17:23] SPEAKER_03: or standing out from all of these competitors
[17:27] SPEAKER_03: in the finance world in Canada.
[17:29] SPEAKER_01: Yeah, so I, of course, would say we're standing out.
[17:33] SPEAKER_01: But I think, you know, how I would describe that is, you know,
[17:38] SPEAKER_01: as a bank globally, we've been around for almost 40 years.
[17:43] SPEAKER_01: So, you know, exclusively working with tech and innovative companies.
[17:49] SPEAKER_01: And so, that's something that we're 100% committed to.
[17:54] SPEAKER_01: And that's something that I think we're the only bank that can say that.
[17:57] SPEAKER_01: So, you know, where is the Canadian banks that you reference
[18:01] SPEAKER_01: have personal banking, commercial banking for all sorts of different companies?
[18:06] SPEAKER_01: And they might have like a division that's focused,
[18:10] SPEAKER_01: or starting to focus on the tech space.
[18:12] SPEAKER_01: Okay.
[18:12] SPEAKER_01: This is all we do.
[18:14] SPEAKER_01: And so, we're 100%, you know, fully invested in
[18:18] SPEAKER_01: that space.
[18:20] SPEAKER_01: And through the last 40 years of experience, like,
[18:23] SPEAKER_01: there's been different cycles in the tech ecosystem.
[18:26] SPEAKER_01: And so, I think we've also proven that we're good partners
[18:30] SPEAKER_01: through some challenges.
[18:32] SPEAKER_01: So, I think anybody can lend money when things are great.
[18:35] SPEAKER_01: And, but it's what do you do when there's a challenge?
[18:38] SPEAKER_01: And how do you respond?
[18:40] SPEAKER_01: And I think we've just had that proof point, you know,
[18:44] SPEAKER_01: that we're really good partners.
[18:46] SPEAKER_01: The other thing I would say is that because we work with so many innovative companies,
[18:52] SPEAKER_01: I think it's somewhere in the fall part of like 30,000 globally.
[18:57] SPEAKER_01: And that represents like half of the VC back companies in the US.
[19:02] SPEAKER_01: And, you know, just tons and tons of experience over the last number of years.
[19:06] SPEAKER_01: I think that that has just created this depth of knowledge in our, in our organization, where,
[19:13] SPEAKER_01: you know, it's not like you're looking at something for the first time.
[19:16] SPEAKER_01: You have that pattern recognition.
[19:17] SPEAKER_01: You've seen it over and over again.
[19:19] SPEAKER_01: You know what to look out for.
[19:21] SPEAKER_01: And so, you can act quickly.
[19:22] SPEAKER_01: You can understand the business and sort of work more strategically with those founders
[19:29] SPEAKER_01: versus having like a, you know, like a format where it's like, you know,
[19:34] SPEAKER_01: here's a formula of how we do it.
[19:36] SPEAKER_01: Like, it's not really, you know, it's not really the approach that we take.
[19:40] SPEAKER_01: It's more about understanding the businesses and having that deep sector knowledge.
[19:46] SPEAKER_02: The team at Silicon Valley Bank in Canada can help you move your bold ideas forward.
[19:53] SPEAKER_02: Fast.
[19:54] SPEAKER_02: Bringing global expertise to founders, investors and innovators.
[19:58] SPEAKER_02: Visit www.svb.com slash Canada slash connect to find out more.
[20:06] SPEAKER_03: We talked a little bit about interest rates.
[20:08] SPEAKER_03: We never talked about term.
[20:09] SPEAKER_03: I know you said, I'm going back now to a question that I forgot to get clarity on.
[20:14] SPEAKER_03: But, you know, quite often you're in it for the long haul with your relationships
[20:18] SPEAKER_03: that of the companies that you fund.
[20:21] SPEAKER_03: So, what sort of, you know, are we talking, you know, five years through startup or startup
[20:26] SPEAKER_03: to sell or are we talking, you know, the 20 year long haul durations?
[20:30] SPEAKER_03: What sort of experience do you have?
[20:32] SPEAKER_01: Yeah, I think most of them.
[20:33] SPEAKER_01: So, we've got some that are more like working capital facilities that are, you know,
[20:38] SPEAKER_01: a couple years and you renew it every time and, you know, that's sort of like an ongoing thing.
[20:42] SPEAKER_01: And then for term facilities, it's usually, you know, in the three, four year mark to begin with.
[20:48] SPEAKER_01: And most of the time what happens is when those companies go from one milestone to the next
[20:55] SPEAKER_01: or like maybe they're raising their next round within that few year timeframe, then we usually
[21:01] SPEAKER_01: refresh the facility and kind of kind of give them a new amount, like a larger amount and extend the
[21:08] SPEAKER_01: term. So, it's something that's set.
[21:11] SPEAKER_01: But the, by, you know, I guess the majority of cases is that we set it and then they hit the
[21:18] SPEAKER_01: next milestone, we give them a new facility, refresh it and continue on with that as they scale.
[21:23] SPEAKER_01: Okay, perfect.
[21:24] SPEAKER_03: Well, I just wanted to come back a little bit to tech and, you know, historically, especially with
[21:30] SPEAKER_03: the name brand of Silicon Valley, tech has been internet software computers. Yet Canada is
[21:37] SPEAKER_03: traditionally a resource-based economy. Agriculture, oil, fishing, lumber. So, when we are looking at
[21:45] SPEAKER_03: tech, I just wanted to sort of describe a scenario so that, you know, people across Canada could
[21:51] SPEAKER_03: perhaps see themselves as a tech innovator. And I thought, you know, let's, let's use the example
[21:58] SPEAKER_03: of a self-driving tractor, for example. You know, there's a farmer looking to buy one,
[22:03] SPEAKER_03: there's a manufacturer looking at producing parts and there's a, you know, a vehicle manufacturer
[22:09] SPEAKER_03: looking to buy one from scratch. Who would you lend money to?
[22:14] SPEAKER_01: Yeah, so we would, we would lend money, we would lend money to the company that's, that's producing
[22:21] SPEAKER_01: the vehicles. So, it might be, I mean, it might be that the parts, if the parts are really, you know,
[22:32] SPEAKER_01: proprietary and there, you know, and that's a business in itself. And it might be the, the manufacturer,
[22:39] SPEAKER_01: the vehicle, if, you know, if that's sort of where the innovation lies. I think it's really just like,
[22:45] SPEAKER_01: where's the, the innovation taking place and sort of which company is the one that would be
[22:52] SPEAKER_01: looking to grow really quickly and scale, you know, and, and just become like a larger and more
[23:00] SPEAKER_01: dominant player. I think where that's where we really shine is helping companies do that because we're
[23:07] SPEAKER_01: comfortable with that type of rapid growing business and ways to support them. I think if it's more
[23:13] SPEAKER_01: of like a traditional kind of, you know, operation where they're looking at just kind of coasting along
[23:20] SPEAKER_01: and being, you know, like a, you know, just a small business that's profitable and, and, you know,
[23:27] SPEAKER_01: that's, that's great. I think those are less sort of our target. It's, we're looking more at the kind
[23:33] SPEAKER_01: of big venture scale type ambitions over time. And not everybody gets there, but those are kind
[23:41] SPEAKER_01: of the types of companies that we typically work with. And I understand kind of the value
[23:47] SPEAKER_03: proposition for startups. I'm curious, you know, if I'm maybe a little bit more mature business,
[23:54] SPEAKER_03: or, and I've been with the Canadian Bank for years, do you find people switching to SVB or
[24:01] SPEAKER_03: or adding you as a, as a capital partner in, for a little bit more mature companies? And at what
[24:08] SPEAKER_03: stage of their company growth would you want to partner with them?
[24:12] SPEAKER_01: Yeah, we definitely find companies switching at all stages. I think it's about what we can offer
[24:19] SPEAKER_01: versus the other banks. I think, well, you know, like I said earlier, our offering is really
[24:24] SPEAKER_01: conducive to companies that are trying to, you know, take that leap and be the innovative leader.
[24:32] SPEAKER_01: And so some of that results in things that Canadian banks are not comfortable with, you know,
[24:37] SPEAKER_01: like burning cash and, you know, really putting their foot on the gas. It's not something that's
[24:44] SPEAKER_01: going to have two or three layers of security, you know, tangible security that's going to make
[24:51] SPEAKER_01: a traditional bank comfortable. So I think when companies are looking to accelerate or, you know,
[24:59] SPEAKER_01: maybe raise another large round, that's where we come in and we're able to come up with something
[25:05] SPEAKER_03: a bit more creative in most cases. Well, and something that you and I talked about before the
[25:10] SPEAKER_03: podcast started was the, you know, finding a capital partner within, you know, quickly,
[25:17] SPEAKER_03: either within start-up or growth, because if you wait too long, the options are limited.
[25:21] SPEAKER_03: And, you know, it's sort of the mindset of being stuck in, you know,
[25:29] SPEAKER_03: full ownership and perceived less risk by not bringing on capital partners.
[25:37] SPEAKER_03: You know, can you respond to that as far as why you believe getting a capital partner early
[25:43] SPEAKER_01: is actually good for business? Yeah, I think, you know, every entrepreneur has to decide what
[25:50] SPEAKER_01: what they want to do with their business. So, you know, some want to be owning 100% of it and
[25:58] SPEAKER_01: have like slow, steady growth profitable. That's totally fine. That is like one path that you can
[26:05] SPEAKER_01: choose to take. I think if you are considering raising outside capital, sometimes that path,
[26:14] SPEAKER_01: the slow and steady path does you a bit of a disservice because growth is really being rewarded
[26:20] SPEAKER_01: right now. Growth is being rewarded a lot more than profitability right now. And so, if you can
[26:27] SPEAKER_01: take on some outside capital, ramp up, if you have a use of funds that will help you ramp up your growth,
[26:36] SPEAKER_01: all of the other pieces will come together a lot more easily in terms of, you know, your
[26:42] SPEAKER_01: valuation is going to increase, your opportunities to eventually be acquired or have an, you know,
[26:48] SPEAKER_01: an exit will be a lot higher likelihood. So, I think, you know, I've seen companies wait a bit too
[26:56] SPEAKER_01: long, I think, you know, where they just don't, they want to be a little too sort of tight with,
[27:05] SPEAKER_01: you know, bringing on outside capital and it's resulted in a slower growth. And then ultimately,
[27:11] SPEAKER_01: when they do look to raise outside capital, you know, not everyone knows why you didn't grow that
[27:16] SPEAKER_01: fast, you know, it's like, it's kind of like if you had the money, you would have grown well,
[27:21] SPEAKER_01: maybe, maybe not, I don't know. So, like, you can't assume that people are going to, you know,
[27:26] SPEAKER_01: take that leap with you. I think it's right. It's good to bring on partners when you feel like
[27:31] SPEAKER_01: you have a good use of funds and you're going to really put that money to work and it's going to show
[27:36] SPEAKER_03: in your product development or your growth. Well, and I'm a little bit curious about your comment
[27:43] SPEAKER_03: about growth is being more rewarded over profit right now. I get that, but what? So,
[27:52] SPEAKER_03: profitability, I think, is, you know, cash flow is key, of course, but profitability in the long run
[27:57] SPEAKER_03: is also a goal. So, what is being looked at if, you know, the first few years of profitability
[28:04] SPEAKER_03: aren't there? Is it the possibility of selling? Is it being bought out? What, or is it the fact that we
[28:11] SPEAKER_03: have the venture capital experts, you know, and the mentors that could come in and actually assist
[28:20] SPEAKER_01: with getting that profitability happening? Yeah, I think, you know, there's companies where
[28:27] SPEAKER_01: they, you know, in the beginning, you're sort of experimenting, right? You're seeing like, okay,
[28:32] SPEAKER_01: I'm going to, I'm going to try this and I'll see what happens. I'll try that. And then once you
[28:36] SPEAKER_01: hit something where you're like, okay, I'm spending a dollar on this marketing and I'm getting like
[28:42] SPEAKER_01: multiple dollars back of, you know, growth, like then you've hit something and then you need to
[28:49] SPEAKER_01: think about putting some more capital behind that and that's where, you know, that's where it makes
[28:56] SPEAKER_01: sense to spend those outside dollars because you're getting that kind of big return on, on
[29:03] SPEAKER_01: cost dollars spend. So I think I'm not encouraging people to just spend and kind of lose money,
[29:11] SPEAKER_01: like for no reason. It's sort of like when you find there's, there's some positive outcome from
[29:17] SPEAKER_01: spending the outside capital. Then that's investment that's going to scale your business quickly,
[29:24] SPEAKER_01: your business is going to be worth a lot more faster. And it's going to draw attention for, you know,
[29:30] SPEAKER_01: if you're looking to be acquired or if you're looking to do some kind of large fundraiser,
[29:35] SPEAKER_01: if you're looking to go public, you know, you kind of need to show that you're a leader in your
[29:43] SPEAKER_01: in your sector and that you're, you're sort of worth investing in down the road.
[29:48] SPEAKER_03: I want to switch tax a little bit and just talk about venture check trends in Canada overall.
[29:56] SPEAKER_03: SVB is been, now, can I just to clarify, should we be using the phraseology SVB or a Silicon bank
[30:03] SPEAKER_03: or they interchangeable? SVB is a lot of people see as SVB. So in SVB, you've been here since 2019.
[30:11] SPEAKER_03: Have you seen any geographies or clusters of sectors that you've tapped into specifically
[30:20] SPEAKER_01: here in Canada? Yeah, so I think there is a lot of data that supports this as well, like Ontario,
[30:27] SPEAKER_01: Quebec, BC are the three most active provinces in terms of the tech space, but we also have a lot
[30:37] SPEAKER_01: of clients in across the prairies, Atlantic Canada. So I think, you know, that might be shifting,
[30:45] SPEAKER_01: a lot of companies, especially during COVID, went to more remote work forces looking to find talent,
[30:54] SPEAKER_01: looking to find places where they can have a better lifestyle, you know, their employees can
[31:01] SPEAKER_01: have a better lifestyle. So, you know, there's more of a shift to going to some other communities,
[31:07] SPEAKER_01: and I think that probably is a trend that's going to continue because, you know, there's some benefit
[31:13] SPEAKER_01: in being in the sort of, you know, Ontario, Quebec, BC regions because you have others that
[31:22] SPEAKER_01: have done it and you're sort of in a community, but on the other hand, cost wise, it does make
[31:28] SPEAKER_03: sense to also look elsewhere. Well, and do you see any link between education and innovation?
[31:37] SPEAKER_01: Yeah, so in Canada, that's one of the things that I think we really, we're really shine, so like,
[31:42] SPEAKER_01: we've got world-class universities that are developing technologies that are spinning out into
[31:48] SPEAKER_01: really fantastic companies, and I think that's one of the key advantages that we have. So
[31:56] SPEAKER_01: I would definitely say that that's a huge factor, also talent, you know, that are coming out of
[32:03] SPEAKER_01: those universities that, you know, not just the technology, but the individuals that can be
[32:07] SPEAKER_01: sort of hired into some of these tech companies are really world-class, and I think that's something
[32:13] SPEAKER_01: that we've noted. I think Canada also, of course, has a lot of government incentives for early-stage
[32:20] SPEAKER_01: companies, and that's a huge benefit for those companies in the early days where it's actually
[32:26] SPEAKER_01: really difficult to find other sources of capital. So various grants or tax credits can really be
[32:35] SPEAKER_03: a lifeline for companies in the early days. And related to that, do you see any link between
[32:43] SPEAKER_03: you know, the establishment of, I'll call them innovation hubs or incubators or, you know, tech
[32:51] SPEAKER_03: physical centers, and you know, the businesses that are popping out of those?
[32:57] SPEAKER_01: Yeah, I think there's some, I mean, some of it is we've now, you know, had a number of years or
[33:04] SPEAKER_01: decades where there's been companies that are sort of homegrown, maybe exited, those founders are
[33:11] SPEAKER_01: now a second or third time founder. There's sort of this ecosystem of talent that's that's been built
[33:18] SPEAKER_01: over time. So I think that also fosters sort of the next companies and maybe a bit of like a hub for
[33:25] SPEAKER_01: different types of technologies. I mean, certainly when I look at Alberta, a lot more companies
[33:32] SPEAKER_01: in Alberta are focusing on the oil and gas sector than, you know, in Toronto, for example. Like,
[33:38] SPEAKER_01: there's just kind of the like, with or near their end client, and we also see, you know, Agtech in
[33:44] SPEAKER_01: BC, Alberta, Saskatchewan, you know, not so much in maybe PEI or whatever. So like, we're definitely
[33:53] SPEAKER_01: seeing some of that, but I think there's also really interesting hubs. Like you mentioned earlier,
[33:59] SPEAKER_01: there's kind of a traditional resource economy in Canada, but like, that's changing really fast.
[34:07] SPEAKER_01: Like, we of course are going to always have that resource economy, but Canada is really on the map
[34:13] SPEAKER_01: right now as, as like a world class tech location. Well, we've, I've heard from SVB that more than
[34:22] SPEAKER_03: 86% of new companies actually remain in their home province. So when it kind of busts that myth that
[34:29] SPEAKER_03: founders, you know, exit and leave for the US, is that can you, do you see that trend yourself?
[34:37] SPEAKER_01: Yeah, I think a lot, I mean, I've noticed a lot of people are also moving back from the US and just
[34:42] SPEAKER_01: wanting to like, not feeling like they have to be in the US. Like, there's enough connectivity
[34:48] SPEAKER_01: with those US markets where they can, they can continue to live in Canada and still, you know, have a,
[34:55] SPEAKER_01: you know, a bit of a connection to the US that's beneficial to their business. I mean, Canadian
[35:00] SPEAKER_01: companies are still selling a lot to the US. Like, it's the number one market, a lot of companies
[35:07] SPEAKER_01: that we work with, their expenses are in Canada and a lot of their revenues are coming from the US
[35:11] SPEAKER_01: or globally. So I think there's always going to be that relationship, but I don't think that there's
[35:15] SPEAKER_01: the feeling that they necessarily have to open their companies, headquarters in those geographies.
[35:22] SPEAKER_01: Like, they might have a satellite office or they might just be operating in Canada.
[35:26] SPEAKER_03: Well, and I've heard another SVB claim that the pandemic helped erase geographic barriers.
[35:32] SPEAKER_03: And this is proved to be a bit of a boon for the venture ecosystem with greater access to US
[35:39] SPEAKER_03: investors for Canadians. And so I guess my question is, is there really more access to capital?
[35:47] SPEAKER_03: Has and why and how has this been happening? Is there a, you know, reduction in red tape to allow
[35:53] SPEAKER_03: more venture capital coming to Canada? What's really happening?
[35:58] SPEAKER_01: Yeah, there used to be a bit of like a saying or whatever that like DCs wanted to invest in their
[36:06] SPEAKER_01: own backyard or be able to, like, there was more of a focus on like, hey, you know, I want to be
[36:13] SPEAKER_01: able to be face to face with companies two or three times through the initial diligence. And then
[36:19] SPEAKER_01: I want to be face to face like throughout the relationship over time. But I think the pandemic
[36:26] SPEAKER_01: obviously made everyone a lot more comfortable with virtual meetings and that really leveled the
[36:34] SPEAKER_01: playing field in terms of, you know, like, it's just as easy to have a meeting with somebody
[36:40] SPEAKER_01: in a completely different geography as it is in your own backyard, you know, during a time like this.
[36:46] SPEAKER_01: Right? So I think that really accelerated people's comfort levels.
[36:52] SPEAKER_01: In that, I think it was going in that direction anyway because people were just always
[36:56] SPEAKER_01: looking for the best deals. And we would always find there'd be somebody from, you know,
[37:02] SPEAKER_01: all different funds coming up here quarterly or monthly to sort of meet with a few companies.
[37:08] SPEAKER_01: And now you can do a lot more quickly from your from your office. And then, you know, invest more
[37:15] SPEAKER_01: broadly in different geographies, just finding the best companies. And yeah, and they're not all in
[37:20] SPEAKER_01: some of the key centers anymore. They're all over the place.
[37:25] SPEAKER_03: Oh, and that's very interesting. I think that coast to coast, finding unique opportunities that
[37:31] SPEAKER_03: are popping up all over the places is probably something that's going to be staying with us
[37:37] SPEAKER_03: for a long term now because, you know, we, the COVID help, you know, disrupt geography and many
[37:43] SPEAKER_01: respects. So, yeah, yeah, so it's also, no, I'm just going to say there's also just a lot more
[37:49] SPEAKER_01: capital out there now than there's ever been. And so because there's so much more capital now than ever,
[37:56] SPEAKER_01: investors are really looking to find those good deals and good companies to partner with. Like
[38:02] SPEAKER_01: founders have tons and tons of options. Like they're not, it's sort of flipped from a number of
[38:08] SPEAKER_01: years ago where founders were like really struggling to find the investor that will take them to
[38:15] SPEAKER_01: the next level. Now, if you're, if you're a good company, you're going to have competing offers
[38:20] SPEAKER_01: from all sorts of investors. And it's, you're going to be able to negotiate and dictate a lot more
[38:25] SPEAKER_03: those terms. And that's right. So there really is a lot more access to capital. There are a lot
[38:29] SPEAKER_03: more people getting private venture capital realm. Very sad. And I've got to ask the question only
[38:35] SPEAKER_03: because, you know, it's, it's the cab drivers are talking about it. It's kind of talking the street
[38:40] SPEAKER_03: as, you know, decentralized current finance and cryptocurrencies and this emerging market there.
[38:49] SPEAKER_03: What's your opinion on decentralized finance? And is there any top of adopting it at SVP?
[38:57] SPEAKER_01: I think, you know, it's something that we're watching really closely. And I think there's a lot of
[39:03] SPEAKER_01: really interesting companies, particularly in in our own backyard here in Canada as well that are
[39:10] SPEAKER_01: innovating in that space and have received a lot of investment and support. So I think it's,
[39:15] SPEAKER_01: it's more quickly becoming a mainstream option. But, you know, as far as how we interact with
[39:23] SPEAKER_01: those companies or what we're able to do with them, I think we're still figuring it out. And I
[39:28] SPEAKER_03: guess working alongside them. Yeah. Absolutely. I mean, I'm diggling a little bit because I'm
[39:32] SPEAKER_03: aware there's even a whole entire country's, you know, like El Salvador. And I think this
[39:37] SPEAKER_03: is what I thought I thought I saw that Kenya has introduced their own cryptocurrency in the country.
[39:43] SPEAKER_03: So it'll be, we can't afford not to watch the space at least a little bit all of us.
[39:48] SPEAKER_03: Cool. Katerina, watch what's our call to action? I would like our listeners to be able to
[39:55] SPEAKER_03: tap into what's going on at SVB. I know we've got some resources that we can direct people to.
[40:03] SPEAKER_03: The first one, there's an entrepreneur's playbook. Do you want to share a little bit about what
[40:08] SPEAKER_01: that's about? Yeah, absolutely. I think, you know, we've got tons and tons of resources.
[40:14] SPEAKER_01: Entrepreneurs playbook. We've got a YouTube channel for startup banking. We've got
[40:21] SPEAKER_01: research documents on our website. So I would highly recommend just taking a look at some of those
[40:27] SPEAKER_01: resources and using them. You know, they're really, really good, really sort of thought leadership
[40:33] SPEAKER_01: pieces and can be helpful. You know, the research can be helpful if you're putting a deck together
[40:40] SPEAKER_01: and you're looking for some stats for your market. And the fundraising workshops can be super
[40:46] SPEAKER_01: helpful because, you know, it's our team and also some conversations with BCs. You're hearing it
[40:52] SPEAKER_01: directly from them as far as what they want to see and what you should do to maybe get their
[40:56] SPEAKER_01: attention. So I think, you know, tapping into that would be super helpful. And if you think you're
[41:03] SPEAKER_01: at the stage where you want to, you know, look at debt or look at working with us more closely,
[41:10] SPEAKER_01: then definitely reach out to one of us to learn more. There's, I think there's a contact
[41:16] SPEAKER_01: link on our website for SVB Canada. So that's the best way to reach us. Absolutely. And I can just say,
[41:22] SPEAKER_03: I've had a look at the founders playbook. I'm just going to say all of the website is svb.com
[41:30] SPEAKER_03: slash founders dash playbook. And if you just search SVB on YouTube, there are 10,000 or more
[41:40] SPEAKER_03: subscribers to the video collection. And I love it because it's very clear. There are little sound
[41:45] SPEAKER_03: bite videos where you can go in and have a look and ask a specific question and get a specific
[41:51] SPEAKER_03: answer, which is fantastic. And of course, you can also sign up for there to receive the email
[41:57] SPEAKER_03: notifications on svb.com slash Canada slash email subscription set up. So I encourage all of our
[42:08] SPEAKER_03: listeners to check that out. Ketterian, is there any last comments you'd love to say to Canadian
[42:14] SPEAKER_03: and of course we have a much broader. We have a global audience of entrepreneurs watching
[42:19] SPEAKER_03: the space of what's happening in Canada. Do you have anything else that you'd like to say?
[42:23] SPEAKER_01: Yeah, I would just say that, you know, I think I would say this and I've heard it from a lot of
[42:28] SPEAKER_01: investor friends of mine. Like there's never been a better time to be an entrepreneur and there's
[42:32] SPEAKER_01: never been a better time to look at scaling your business. So if that's what you're doing,
[42:38] SPEAKER_01: just, you know, keep going with it. And I think we're looking at really a lot more momentum in
[42:44] SPEAKER_01: the next years to come. So excited to work with many of you going forward.
[42:48] SPEAKER_03: Well, and we're excited to share your story and svb story here on Canada's podcast.
[42:53] SPEAKER_03: We're collectively we are making next happen. Ketterina, thanks for joining us today.
[42:59] SPEAKER_03: Thanks so much.
[43:02] SPEAKER_02: The Silicon Family Bank team in Canada can help you take your next step. I'd
[43:08] SPEAKER_02: like to talk more about the bank that has nearly 40 years of global experience supporting venture
[43:12] SPEAKER_02: backed tech and life science companies and their investors. We're in Canada to help leading innovators
[43:19] SPEAKER_02: reach the next stage faster. Visit www.svb.com slash Canada slash connect. Take your next step
[43:30] SPEAKER_02: with Silicon Valley Bank.
