
Illustration: Brendan Lynch/Axios
How did a bank many Bostonians had never heard of become a staple of the region’s startup economy and the center of the nation’s second-largest bank failure?
Background: Silicon Valley Bank’s strength — and ultimately one of its weaknesses — was its stronghold in the tech and life sciences industries that meant it didn’t have to market to ordinary people, experts tell Axios.
- Now, the California-based bank’s collapse has shaken tech hubs across the country and prompted Sen. Elizabeth Warren to introduce a bill to restore banking regulations that had been rolled back during the Trump administration.
Flashback: Silicon Valley Bank expanded into Massachusetts in 1990, a couple of years after it went public. The company gained traction extending credit to budding startups other banks had rejected, even before it was chartered by the state and couldn’t accept deposits from local customers.
- Over the next two decades, SVB capitalized on its niche and became a go-to source for venture debt. But the bank also offered banking and loans for VC firms and public companies, writes Axios’ Kia Kokalitcheva.
- It also joined funding rounds for a handful of local startups, most notably a $55 million fundraise in 2019 for Boston-based wearable tech company Whoop, according to Pitchbook data.
SVB bought Leerink Partners, the Boston-based investment bank that catered to the life sciences industry, for $280 million in 2018. The next year, SVB opened its office in the Financial District, nearly three decades after opening an office along the tech corridor of Route 128.
But what cemented SVB’s footprint in Boston was its purchase of Boston Private Financial Holdings for $900 million in 2021.
- Through that deal, SVB could handle tech millionaires' private banking and gain customers outside of the tech and life sciences sectors.
By 2022, SVB had become the 16th-largest bank in the nation, and the 10th-largest in Massachusetts by deposits. Its failure to diversify its clientele and assets landed the company in what could have been a historic financial catastrophe had the feds not stepped in this weekend, says David Gulley, a macroeconomics professor at Bentley University.
- Others, like Boston-based Mendoza Ventures, had diversified their assets years before the bank collapse. Three of the firm’s 12 portfolio companies had accounts in SVB, but they have since opened accounts elsewhere, says CFO Scott Heyes, who worked as a banker for 25 years in Australia.
The other side: VC firms and lobbyists aren’t ready to give up on SVB. More than 600 signed a statement pledging to do business with SVB if it comes back online, including the New England Venture Capital Association.
- “(SVB) did a really great job of bringing in folks who really had strong startup backgrounds and understood the pain-points of early-stage founders and built a brand that was very sympathetic to those struggles,” says Ari Glantz, NEVCA’s executive director.
What’s next: One of the big, unanswered questions is what would happen to the Boston area's emerging startups if the SVB holding company doesn't get bought, or if a buyer shifts focus away from the innovation economy.
- “From my perspective moving here, nowhere else has an SVB that caters to this market,” Heyes says. “There will be a hole if it doesn’t survive … and that’s probably the hard part because they saw the gap here, they saw the niche here, they made it work.”

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