A favorite topic of VCs -- particularly VCs in Bay Area -- is what makes Silicon Valley so conducive to creating great startups. From my point of view, the things that makes any area conducive to business creation (the Bay Area or Boston or Austin or wherever) are an entrepreneurial culture and a supportive ecosystem of institutions and professionals. While it is certainly possible to create great businesses without those things, it is far more challenging. Places like the Bay Area tend to have a disproportionate number of individuals who are willing to bet on risky ventures. And they have a disproportionate number of lawyers, bankers, investors, accountants who have an expertise in business creation. In combination, all these things are self reenforcing and create an even stronger startup culture, which in turn creates a stronger drive towards business creation, which in turn fuels an economy of startup-focused service providers, which in turn lubricates the funding process, which in turn promotes startup growth, which in turn creates an even stronger startup culture, and so on.
I was thinking about this very question over the weekend while on a "business trip" (aka boondoggle) in the Wine Country sponsored by Silicon Valley Bank. SVB is unquestionably a part of the startup ecosystem in the Bay Area. They work closely with a half dozen companies in which I have invested and with dozens of companies in our portfolio. They appreciate the nature of venture backed startups and provide banking support -- including debt financing, for example -- in a way that acknowledges the nature of startup finances. SVB aren't the only bank in the Bay Area that happily accommodate startups and the unique nature of their profile (namely, their volatility and cash consumption needs) but SVB have made it their mission to court startups and help them find their way through the funding and growth life cycles typical of any successful startup (with all its ups and downs). That support is just one small piece of the ecosystem that I believe distinguishes startup favorable towns from startup hostile locales.
As part of the trip I was on this weekend, Silicon Valley Bank hosted a dinner at Silver Oak Cellars. Silver Oak is one of SVB's winery clients and as a result they opened up their cellars to a group of SVB's friends in the Venture business. We were given a tour of the Silver Oak facilities by their Vice President of Marketing who stressed the importance of relationships throughout the tour. Building on that theme, Harry Kellogg (SVB's Vice Chairman and President of SVB Capital) toasted to a partnership between his bank and the Venture community -- he said something to the effect of "we provide startups with the debt they need, you provide them with the equity they need, and Silver Oak provides them with the wine they need." While, at $60 and up a bottle, I'm not sure how many startups are taking solace in Silver Oak, I do think that the partnership between Silicon Valley Bank and the Venture community has been a good one. It makes up one small corner of the startup ecosystem that continues to make the Bay Area a fantastic place in which to build new businesses.