Silicon Valley Bank Moves to Frankfurt With Deutsche AlumnaBy
Company expects BaFin to issue banking licence by end of May
Offices in Frankfurt’s Westend leased, management team ready
(Machine translation provided by Google and reviewed by Bloomberg editors.)
U.S. based Silicon Valley Bank expects to receive a banking license from Germany’s Federal Financial Supervisory Authority (BaFin) by the end of May and to open its first German location in Frankfurt in the coming weeks, according to Phil Cox, head of EMEA. Offices in the Westend district have already been leased and the management team is in place.
"We have made good progress with BaFin and are very positive," Cox said in an interview with Bloomberg. His firm is considered to be a go to bank for the American startup and technology industries. About 50 percent of all venture capital-backed tech and life science companies in the US are among its customers. In the first quarter of 2018, the average credit volume was $23.8 billion.
Now, the bank wants to conquer the German market, focusing initially on granting loans. "We will also lend money to companies that burn money," Cox said. In addition, he pointed to venture capital and private equity firms investing in tech startups as other potential target groups.
Eight employees hired for Frankfurt
German tech industry association Bitkom welcomes the potential market entry. "There is certainly more restraint in Germany than in some other countries to finance companies that want to grow fast with an innovative idea first," according to managing director Niklas Veltkamp. "More competition can only benefit startups."
Silicon Valley Bank has already hired eight employees for its office in Frankfurt’s Westend. Among them is Iris Liliana Bleck, who served as Vice President at Deutsche Bank AG until last year and, among other things, took care of regulatory matters. She is supposed to take over one of two Germany chief posts within twelve months. Oscar Jazdowski and John Peck, two long-time employees of the bank, will head the new location at first.
French location was also considered
"By the end of 2018, we want to increase the number of our employees in Frankfurt to 20. In five to seven years, it could also be several hundred employees," Cox said. He pointed out that the London office, which opened in 2012, now has about 200 people working there. He also drew parallels when it comes to credit volume. "In the UK, we’ve been lending $3 billion in loans so far, and I see no reason why we should not reach those volumes in Germany within seven years as well."
In 2017, Germany took only third place in the number of startup financing rounds in Europe, according to a study by Ernst & Young. The United Kingdom secured first place with 893 rounds, followed by France with 605 rounds and Germany with 507 rounds. Nonetheless: "In the last ten years in Germany, we have reduced the gap to other countries," Peter Lennartz, partner with the consultant and head of a start-up initiative, said.
According to Cox, his company was also looking into expanding to France, the runner-up in the Ernst & Young study, and Scandinavia, because there are also many innovative companies there. "But entering France is quite complicated, and Scandinavia is very fragmented with its three or four countries," he said. "Ultimately the decision fell on Germany."
In March, the company also announced several milestones in its plans to further expand into Canada. The country’s Minister of Finance had issued an order authorizing Silicon Valley Bank to establish a lending branch there, it said.