It was a particularly bloody day for technology companies when Greg Becker, then the chief executive of Silicon Valley Bank, appeared on CNBC in late August. The tech-heavy Nasdaq stock index was down 2 per cent that session alone.
Yet Becker was his usual reassuring presence. The market correction would ultimately be healthy for the sector, he reasoned. In the meantime, the bank’s balance sheet had never been stronger and it had an enviable record.
“We’ve been doing this, you know, for 30-plus years. So we’ve been through many cycles and I think we feel really good about our process,” he said.
Last Friday, Becker appeared in an altogether different video — this time pleading with employees to hold on just a bit longer as the tech industry’s dominant bank was sinking under the waves. “Can you guys just hang around, try to support each other, try to support our clients, work together, which may be a slightly better outcome than where we are right now?” he asked. By then, Becker had been ousted by federal regulators.
No bank paralleled the extraordinary rise of the modern tech industry quite like SVB. Founded as a regional California lender in 1983, it became a powerhouse, boasting by 2019 to have banked half of all venture-backed tech and life sciences companies in the US. Arguably, no banker personified that era like Becker, who, during a three-decade career at SVB, helped it rise from being a junior lender to a pillar of the Valley and the tech economy itself.
Some who know Becker and SVB’s leadership wonder what happened behind the scenes before the bank’s downfall. The US Department of Justice also wants answers and has opened an investigation into the collapse.
Ultimately, an institution that prided itself on being the most sophisticated lender to the tech world was brought down by something relatively commonplace: its bond portfolio’s vulnerability to rising interest rates. Becker did not respond to requests for comment.
People who know Becker tend to describe him as honourable, solid and highly driven — more an executor than a visionary. The avid cyclist has the lean physique of an endurance athlete and was known to get by on just a few hours sleep at night. As he rose through SVB’s ranks, he relied on an executive coach to improve his empathy.
“He’s a very quick decision maker and decisive, which can be a strength and an Achilles heel,” said one former SVB executive, who wondered if there was a sufficiently strong team around Becker to challenge him, particularly on the bank’s management of its bond portfolio.
This person also pointed to SVB’s rapid expansion as a possible seed of its demise. “Did they grow so quickly that they outgrew their people, including their chief executive?” the person asked.
Becker grew up in rural north-east Indiana, where his family had a 300-acre farm. He joined Comerica, then a Detroit-based lender, after graduating from Indiana University with a business degree. Soon after relocating to its Bay Area branch, he and another young colleague followed their boss, Marc Verissimo, to SVB.
At the time, SVB, like other US commercial lenders, was struggling with troubled real estate loans. It eventually decided to shed such assets and focus its resources on the burgeoning tech industry.
One of the first big loans Becker made was $350,000 to a start-up networking company that Cisco would buy a few months later for $100mn, he has recalled. In discussing his work, he tends to display a kind of Midwestern earnestness.
“If you believe you have helped the company, you go home at night, you feel pretty darn good that you’ve made a difference in a company that’s changing something significant in the world,” Becker told Bloomberg Radio a few years ago.
By 1996, he had been sent to open SVB’s office in Boulder, Colorado, and then returned to northern California a few years later to lead its venture capital arm, where he thrived. Cycling, it turns out, was better than golf to network with the Valley’s venture capital crowd. Becker and the SVB team often dominated a 100-mile annual charity race from Carmel to Hearst Castle — and also raised the most money.
Becker used SVB’s connections among Sonoma and Napa county vineyards to wine and dine tech barons. A premium wine lending arm was one unit the bank retained after it decided to shear off others and focus solely on tech.
In Becker’s own telling, the bursting of the 1990s dotcom bubble was a formative event — for him and the bank. “I look back and some of my best relationships in the venture capital community were formed back in that time period, working through difficult situations because you had to,” he said. That was consistent with the mantra of Becker’s predecessor and mentor, Ken Wilcox: always put the client first.
In 2011, Becker became chief executive of SVB and its parent company, SVB Financial Group, while Wilcox left to establish a beachhead in China.
He reinforced the bank’s strategy of signing up thousands of tech start-ups and then banking them — and their executives — as they progressed. “Bring them in early and support them all throughout their lifecycle” is how Becker described it.
One of the bank’s hallmarks was its willingness to show leniency, providing a lifeline for a promising company between funding rounds, even if its performance was rocky. That sort of commitment was more in keeping with the Valley’s ethos than that of a staid lender. It won SVB the allegiance of company founders and venture capitalists, and warded off challengers from Wall Street.
In March 2020, when the Covid-19 pandemic struck, Becker gathered staff and promised he would guarantee their bonuses, no matter what happened. The idea, according to one grateful SVB banker, was that with their own finances secure, staff could focus entirely on clients. Becker also realised that SVB’s winery customers would be particularly hurt by travel restrictions and set up a team to help. “People can say we cater to a bunch of elitists, but [it] showed how SVB’s spirit was our clients are first,” the banker said.
While many of its fledgling clients inevitably failed, SVB can claim to have banked companies such as Airbnb, Twitter and Uber, among others, from their earliest days. Grateful testimonials from founders are splattered across its website.
But so immersed was SVB in a single community that it may have also led to confusion about its identity. “We’re not bankers — we’re something more than bankers” is how the former executive described the prevailing attitude at the lender.
Silicon Valley Bank collapse
Explore the latest news and analysis on the fallout from the failure of Silicon Valley Bank, the lender to start-ups which became the second-largest bank collapse in US history
In 2021, US venture-backed companies raised a record $344.7bn. SVB’s deposits reached $189bn by the end of that year, up from $49bn at the end of 2018, with much of it parked by tech companies flush with cash from investors.
That began to reverse last year as interest rates shot up. The era of easy money had come to an end.
By January, problems were mounting in SVB’s bond portfolio and dissenters were questioning the bank’s prospects. “You could just feel it in the air by summer that things were just not right,” recalled one SVB banker, who did not view financial acumen as one of Becker’s great strengths. In an interview with the Financial Times, though, the chief executive was sanguine.
“The innovation economy has to have companies that fail or else they’re not innovating enough. So there will be more headlines in 2023 about failure rates and lay-offs,” Becker said. “But that’s part of the cycle that tech and life science companies go through. So none of us should be surprised.”
Additional reporting by Tabby Kinder in San Francisco and Antoine Gara in New York