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Greg Becker, the long-standing SVB chief sunk by a turn in interest rates

It was a very bloody day for expertise corporations when Greg Becker, then the chief govt of Silicon Valley Financial institution, appeared on CNBC in late August. The tech-heavy Nasdaq inventory index was down 2 per cent that session alone.

But Becker was his normal reassuring presence. The market correction would finally be wholesome for the sector, he reasoned. Within the meantime, the financial institution’s stability sheet had by no means been stronger and it had an enviable file.

“We’ve been doing this, , for 30-plus years. So we’ve been by many cycles and I feel we really feel actually good about our course of,” he mentioned.

Final Friday, Becker appeared in an altogether completely different video — this time pleading with staff to carry on only a bit longer because the tech trade’s dominant financial institution was sinking underneath the waves. “Are you able to guys simply cling round, attempt to help one another, attempt to help our shoppers, work collectively, which can be a barely higher final result than the place we’re proper now?” he requested. By then, Becker had been ousted by federal regulators.

No financial institution paralleled the extraordinary rise of the trendy tech trade fairly like SVB. Based as a regional California lender in 1983, it grew to become a powerhouse, boasting by 2019 to have banked half of all venture-backed tech and life sciences corporations within the US. Arguably, no banker personified that period like Becker, who, throughout a three-decade profession at SVB, helped it rise from being a junior lender to a pillar of the Valley and the tech financial system itself.

Some who know Becker and SVB’s management surprise what occurred behind the scenes earlier than the financial institution’s downfall. The US Division of Justice additionally desires solutions and has opened an investigation into the collapse.

A queue outdoors an workplace of Silicon Valley Financial institution in Santa Clara, California, after its collapse © Justin Sullivan/Getty Photos

Finally, an establishment that prided itself on being probably the most refined lender to the tech world was introduced down by one thing comparatively commonplace: its bond portfolio’s vulnerability to rising rates of interest. Becker didn’t reply to requests for remark.

Individuals who know Becker have a tendency to explain him as honourable, strong and extremely pushed — extra an executor than a visionary. The avid bicycle owner has the lean physique of an endurance athlete and was identified to get by on only a few hours sleep at night time. As he rose by SVB’s ranks, he relied on an govt coach to enhance his empathy.

“He’s a really fast determination maker and decisive, which is usually a power and an Achilles heel,” mentioned one former SVB govt, who questioned if there was a sufficiently sturdy group round Becker to problem him, significantly on the financial institution’s administration of its bond portfolio.

This individual additionally pointed to SVB’s speedy growth as a potential seed of its demise. “Did they develop so rapidly that they outgrew their individuals, together with their chief govt?” the individual requested.

Becker grew up in rural north-east Indiana, the place his household had a 300-acre farm. He joined Comerica, then a Detroit-based lender, after graduating from Indiana College with a enterprise diploma. Quickly after relocating to its Bay Space department, he and one other younger colleague adopted their boss, Marc Verissimo, to SVB.

On the time, SVB, like different US business lenders, was combating troubled actual property loans. It will definitely determined to shed such belongings and focus its assets on the burgeoning tech trade.

One of many first large loans Becker made was $350,000 to a start-up networking firm that Cisco would purchase a couple of months later for $100mn, he has recalled. In discussing his work, he tends to show a type of Midwestern earnestness.

“Should you imagine you’ve got helped the corporate, you go residence at night time, you are feeling fairly darn good that you simply’ve made a distinction in an organization that’s altering one thing vital on the planet,” Becker instructed Bloomberg Radio a couple of years in the past.

By 1996, he had been despatched to open SVB’s workplace in Boulder, Colorado, after which returned to northern California a couple of years later to steer its enterprise capital arm, the place he thrived. Biking, it seems, was higher than golf to community with the Valley’s enterprise capital crowd. Becker and the SVB group typically dominated a 100-mile annual charity race from Carmel to Hearst Citadel — and likewise raised probably the most cash.

Becker used SVB’s connections amongst Sonoma and Napa county vineyards to wine and dine tech barons. A premium wine lending arm was one unit the financial institution retained after it determined to shear off others and focus solely on tech.

In Becker’s personal telling, the bursting of the Nineteen Nineties dotcom bubble was a formative occasion — for him and the financial institution. “I look again and a few of my finest relationships within the enterprise capital group have been fashioned again in that point interval, working by troublesome conditions since you needed to,” he mentioned. That was in line with the mantra of Becker’s predecessor and mentor, Ken Wilcox: all the time put the shopper first.

In 2011, Becker grew to become chief govt of SVB and its mother or father firm, SVB Monetary Group, whereas Wilcox left to ascertain a beachhead in China.

He bolstered the financial institution’s technique of signing up hundreds of tech start-ups after which banking them — and their executives — as they progressed. “Carry them in early and help all of them all through their lifecycle” is how Becker described it.

Greg Becker speaking at an International Economic Forum of the Americas conference in 2013
Becker grew to become chief govt of SVB and its mother or father firm, SVB Monetary Group, in 2011 © David Vilder/Bloomberg

One of many financial institution’s hallmarks was its willingness to indicate leniency, offering a lifeline for a promising firm between funding rounds, even when its efficiency was rocky. That type of dedication was extra in line with the Valley’s ethos than that of a staid lender. It received SVB the allegiance of firm founders and enterprise capitalists, and warded off challengers from Wall Avenue.

In March 2020, when the Covid-19 pandemic struck, Becker gathered employees and promised he would assure their bonuses, it doesn’t matter what occurred. The concept, based on one grateful SVB banker, was that with their very own funds safe, employees may focus fully on shoppers. Becker additionally realised that SVB’s vineyard clients can be significantly harm by journey restrictions and arrange a group to assist. “Individuals can say we cater to a bunch of elitists, however [it] confirmed how SVB’s spirit was our shoppers are first,” the banker mentioned.

Whereas a lot of its fledgling shoppers inevitably failed, SVB can declare to have banked corporations corresponding to Airbnb, Twitter and Uber, amongst others, from their earliest days. Grateful testimonials from founders are splattered throughout its web site.

However so immersed was SVB in a single group that it might have additionally led to confusion about its identification. “We’re not bankers — we’re one thing greater than bankers” is how the previous govt described the prevailing perspective on the lender.

In 2021, US venture-backed corporations raised a file $344.7bn. SVB’s deposits reached $189bn by the tip of that yr, up from $49bn on the finish of 2018, with a lot of it parked by tech corporations flush with money from buyers.

That started to reverse final yr as rates of interest shot up. The period of simple cash had come to an finish.

By January, issues have been mounting in SVB’s bond portfolio and dissenters have been questioning the financial institution’s prospects. “You might simply really feel it within the air by summer time that issues have been simply not proper,” recalled one SVB banker, who didn’t view monetary acumen as one in every of Becker’s nice strengths. In an interview with the Monetary Occasions, although, the chief govt was sanguine.

“The innovation financial system has to have corporations that fail or else they’re not innovating sufficient. So there will probably be extra headlines in 2023 about failure charges and lay-offs,” Becker mentioned. “However that’s a part of the cycle that tech and life science corporations undergo. So none of us must be shocked.”

Extra reporting by Tabby Kinder in San Francisco